Question

he following information is for Ivanhoe Company: 1. Cash balance per bank, July 31, $7,658. 2. July bank service charge not recorded by the depositor, $22. 3. The bank erroneously charged another company’s $730 cheque against Ivanhoe’s account. 4. Cash balance per books, July 31, $9,135. 5. The bank charged Ivanhoe’s account $360 for a customer’s NSF cheque. 6. Deposits in transit, July 31, $2,290. 7. Ivanhoe recorded a cash receipt for a cash sale from a customer as $32. The bank correctly recorded it as $23. 8. The bank collected a $1,300 note for Ivanhoe in July, plus interest of $37, less a fee of $21. The collection has not been recorded by Ivanhoe and no interest has been accrued. 9. Outstanding cheques, July 31, $618.

a)epare a bank reconciliation for July 31. (List items that increase balance as per bank & books first.)

b)Journalize the adjusting entries for July 31 on the books of Ivanhoe Company.

Answer 1

Bank Reconciliation Statement
balance as per Bank Statement		7658
Add:
Deposits in transit			2290
Error in recording the check		730
Sub total				10678
Less:
Outstanding checks			618
Adjusted balance as per Bank Statement	10060
Balance as per books		9135
Add:
Note collected (1300+37-21)		1316
Sub total				10451
Less:
Service charges not recorded		22
NSf check				360
Error in recording cash sale		9
Adjusted balance as per Books		10060
Adjusting entries
S.no.	Accounts title and explanations		Debit $	Credit $
a.	Cash account			1316
	Misc. expense			21
	Interest revenue				37
	Notes receivable				1300
	(for note collected)
b.	Misc.expenses			22
	Cash account				22
	(for service charges)
c.	Accounts receivable			360
	Cash account				360
	(for NSF check)
d.	Sales revenue			9
	Cash account				9
	(for cash sales recorded in error)