Question

On October 31 Larkspur Ltd. received its bank statement from Provincial Bank. It stated that Larkspur had a balance of $9,660 at October 31. The company’s general ledger showed a cash balance of $10,220 at that date. A comparison of the bank statement and the accounting records revealed the following information:

●		Bank service charges for the month were $40.
●		The company had written and mailed out cheques with a value of $1,530 that had not yet cleared the bank.
●		A cheque from one of Larkspur’s customers in the amount of $800 that had been deposited during the last week of October was returned with the bank statement as NSF.
●		An electronic funds transfer payment (EFT) of $250 for monthly insurance expense was automatically deducted from Larkspur’s bank account on October 22. Larkspur’s bookkeeper had forgotten to record this transaction.
●		During the month, the company’s bookkeeper had recorded a cheque (#1872) paid for utilities as $575 rather than $755 (which was the amount written on the cheque and processed by the bank).
●		The cash receipts for October 31 amounted to $820 and had been deposited in the night drop slot at the bank on the evening of October 31. These were not reflected on the bank statement for October

Answer 1

sollution

Larkspur Ltd
Bank Reconciliation - at October 31
Bank's Cash balance	Company's cash balance
Particulars		Particulars	Amount
Ending balance as per Bank Statements	$9,660.00	Ending Balance as per cash books	$10,220.00
Additions:		Additions:
Deposit In Transit	$820.00
		Deductions:
Deductions:		NSF CHEQUE	$800.00
		Insurance Expenses	$250.00
Outstanding Checks	$1,530.00	Incorrect recording of check($755-$575)	$180.00
		Service Charge	$40.00
Adjusted bank balance	$8,950.00	Adjusted Cash balance	$8,950.00

Larkspur Ltd
S.no	Account Title	Debit	credit
a	Miscellaneous Expense	$40
	cash		40
	(To record Service Charge )
b	No Journal Entry Required
c	Accounts receivables	$800
	cash		800
	(To record NSF Check from customer)
d	Insurance expenses	$250
	cash		250
	(To record Insurance Exp.)
e	Utilities expenses	$180
	cash		$180
	(To record correction entry for check no 1872
f	No Journal Entry Required