Question

The following information was available to reconcile Montrose Company’s book balance of Cash with its bank statement balance as of October 31, 2017:

a.	After all posting was completed on October 31, the company’s Cash account had a $13,204 debit balance, but its bank statement showed a $29,324 balance.
b.	Cheques #296 for $1,333 and #307 for $12,744 were outstanding on the September 30 bank reconciliation. Cheque #307 was returned with the October cancelled cheques, but cheque #296 was not. It was also found that cheque #315 for $892 and cheque #321 for $1,998, both written in October, were not among the cancelled cheques returned with the statement.
c.	In comparing the cancelled cheques returned by the bank with the entries in the accounting records, it was found that cheque #320 for the October rent was correctly written for $6,080 but was erroneously entered in the accounting records as $6,800.
d.	A credit memo enclosed with the bank statement indicated that there was an electronic fund transfer related to a customer payment for $21,900. A $120 bank service charge was deducted. This transaction was not recorded by Montrose before receiving the bank statement.
e.	A debit memo for $3,251 listed a $3,202 NSF cheque plus a $49 NSF charge. The cheque had been received from a customer, Jefferson Tyler. Montrose had not recorded this bounced cheque before receiving the statement.
f.	Also enclosed with the statement was a $74 debit memo for bank services. It had not been recorded because no previous notification had been received.
g.	The October 31 cash receipts, $7,278, were placed in the bank’s night depository after banking hours on that date and this amount did not appear on the bank statement.

Required:
1. Prepare a bank reconciliation for the company as of October 31, 2017.     



2. Prepare the General Journal entries necessary to bring the company’s book balance of Cash into agreement with the reconciled balance. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Answer 1

1.

Montrose Company
Bank Reconciliation
October 31, 2017
Bank statement balance		$ 29,324	Book balance		$ 13,204
Additions:			Additions:
Deposit in transit		$    7,278	Error in recording of check #320 ($6,800-6,080)	$        720
			Electronic fund transer ($21,900-$120)	$ 21,780
Deduct:Outstanding checks					$ 22,500
#296	$ 1,333		Deduct:
#315	$     892		NSF Check	$    3,251
#321	$ 1,998		Bank Service charges	$          74
		$    4,223			$    3,325
Adjusted bank balance		$ 32,379	Adjusted book balance		$ 32,379

Date	General Journal	Debit	Credit
	Cash	$        720
	Rent expense		$        720
	(To correct erro in recording of check# 320)
	Cash	$ 21,780
	Misc. expenses / Bank charges	$        120
	Accounts receivable		$ 21,900
	(To record EFT)
	Accounts receivable	$    3,251
	Cash		$    3,251
	(To record NSF Check)
	Misc. expenses / Bank charges	$          74
	Cash		$          74
	(To record bank service charge)

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