Question

Items on Company's Bank Statement

The following items may appear on a bank statement:

1. Bank correction of an error from posting another customer's check (disbursement) to the company's account

2. EFT deposit

3. Loan proceeds

4. NSF check

Indicate whether each item would appear as a debit or credit memo on the bank statement and whether the item would increase or decrease the balance of the company's account:

Item	Appears on the Bank Statement as a Debit or Credit Memo	Increases or Decreases the Balance of the Company's Bank Account
1.  Bank correction of an error from posting another customer's check (disbursement) to the company's account
2.  EFT deposit
3.  Loan proceeds
4.  NSF check

Bank Reconciliation

The following data were gathered to use in reconciling the bank account of McCurdy Company:

Balance per bank	$ 33,720
Balance per company records	28,125
Bank service charges	155
Deposit in transit	4,970
NSF check	1,830
Outstanding checks	12,550

a. What is the adjusted balance on the bank reconciliation?
$

b. Journalize any necessary entries for McCurdy Company based on the bank reconciliation. For a compound transaction, if an amount box does not require an entry, leave it blank.

Petty Cash Fund

Prepare journal entries for each of the following. For a compound transaction, if an amount box does not require an entry, leave it blank.

a. Issued a check to establish a petty cash fund of $450.

b. The amount of cash in the petty cash fund is $150. Issued a check to replenish the fund, based on the following summary of petty cash receipts: store supplies, $175 and miscellaneous selling expense, $111. Record any missing funds in the cash short and over account. For a compound transaction, if an amount box does not require an entry, leave it blank.

Answer 1

ANSWER:  

Item	Appears on the Bank Statement as a Debit or Credit Memo	Increases or Decreases the Balance of the Company's Bank Account
1.  Bank correction of an error from posting another customer's check (disbursement) to the company's account	DEBIT	DECREASES
2.  EFT deposit(payment by company) for ex: salaries to E'ees to their account directly. If it is a receipt from another company through EFT then companies bank balance will be increased and a credit memo will appear.	DEBIT	DECREASES
3.  Loan proceeds	CREDIT	INCREASES
4.  NSF check(Charges by bank)	DEBIT	DECREASES

MCCURDY INC.

BANK RECONCILIATION
  

Cash balance according to Bank statement $33720

Add: Deposits in Transit $4970

$38690

Deduct: Outstanding checks $12550

Adjusted cash balance    $26140

Balance as per company records $28125

Deduct:

Bank service charges $155

NSF checks $1830

Adjusted cash balance    $26140

a)adjusted balance on bank reconciliation is $26140.

b)journal entries

For Bank service charges

Bank charges A/c dr $155

To cash A/c cr $155

For Deposit in Transit- not required

For NSF checks

Accounts receivable A/c dr $1830

To cash A/c cr $1830

(being customers check was deposited but now being returned because of insufficient funds)

For outstanding checks -not required

PETTY CASH FUND

a)Journal entry for issue of check to establish petty cash fund

Petty cash fund A/c dr $450

To Bank A/c cr $450

b)journal entry

store supplies A/c dr $175

miscellaneous selling expense A/c dr $111

To cash A/c cr $150

To cash short and over A/c cr $36