Question

On October 31, 2021, Blossom Company had a cash balance per books of $8,967. The bank statement on that date showed a balance of $10,150. A comparison of the statement with the Cash account revealed the following:

When the accountant of Pharoah Company prepared the bank reconciliation on May 31, 2021, there were three outstanding cheques: #690 for $306, #693 for $176, and #694 for $266. There were no deposits in transit as at May 31, 2021. The bank balance at May 31 was $17,664. The balance in the Cash account on the May 31, 2021, adjusted trial balance was $16,916. The following is selected information from the June bank statement: Cheques Cleared Date Cheque No. Amount June 1 690 $306 5 709 3,256 6 693 176 13 710 1,486 20 712 2,133 23 119 466 24 711 1,786 Other Bank Account Transactions Date Amount Transaction June 3 $3,316 Deposit 10 5,376 Deposit 17 2,170 Deposit 24 2,137 Deposit 25 -182 NSF cheque 27 -496 EFT insurance payment 30 -22 Service charge 30 41 Interest The NSF cheque was originally received from a customer, Massif Co., in payment of its account of $161. The bank included a $21 service charge for a total of $182. Information from the company’s accounting records follows: Cash Receipts Date Amount June 2 $3,316 9 5,376 16 2,710 23 2,137 30 3,116 Cash Payments Date Cheque No. Amount June 5 708 $2,906 5 709 3,256 19 711 1,786 19 712 2,313 27 713 3,056 27 714 3,856 Investigation reveals that cheque #712 was issued to purchase equipment and cheque #710 was issued to pay an account payable. All deposits are for collections of accounts receivable. The bank made one error: cheque #119 for Pharoah Co. Ltd. was charged to Pharoah’s bank account. The company’s policy is to pass on all NSF service charges to the customer.

Calculate the balance per bank statement at June 30 and the unadjusted Cash balance per company records at June 30.
A) Prepare a bank reconciliation at June 30.

B) Prepare the necessary adjusting entries at June 30.

C) What balance would Pharoah Company report as cash in the current assets section of its balance sheet on June 30, 2021?

Answer 1

A)	Blossom Company
	Bank Reconciliation Statement
	Jun-21
	Unadjusted bank balance		20395
	Add:
	Deposit in Transit	3116
	Error in reeocrding check #119	466	3582
			23977
	Less: Outstanding checks
	No. 694	266
	No. 708	2906
	No. 713	3056
	No. 714	3856
		10084	10084
	Adjusted bank Balance		13893
	Unadjusted cash balance		16398
	Add:
	Interest	41
	Error in check 712	180	221
	Less:		16619
	NSF Check	182
	Error In Deposit	540
	Check No. 710	1486
	EFT Insurance	496
	Bank Service Charge-Cheque printing	22
			2726
	Adjusted Cash Balance		13893
B)
	Acccounts Name	Debit	Credit
a)	cash	41
	interet Revenue		41
	(To record Interest rEVENUE deposited)
b)	Cash	180
	Accounts Payable		180
	(To record correction of error in check 712)
c)	Accounts eceivable	182
	Bank Charges	22
	INSURANCE Expense	496
	Cash		700
	(To record all cash payments)
d)	Accounts Receivable	540
	Cash		540
	(To record correction in error in deposit)
e)	Accounts Payable	1,486
	Cash		1,486
	(To recor check #710)
C)	balance report as cash in the current assets	13,893