Question

The following information has been gathered for Highgate Security for the month ended September 30, 2021: 1) The bank statement indicates a balance of $6,417. 2) The general ledger cash account indicates a balance of $5,422 on September 30, 2021. 3) There was an EFT deposit of $1,700 on the bank statement for the monthly rent from a tenant. 4) The bookkeeper had erroneously recorded a $100 cheque as $1,000. The cheque was to settle the account payable of Janex Supplies. 5) The bank statement revealed $50 in service charges. 6) Cheques #112 and #107 for $1,260 and $785 respectively did not appear on the bank statement. 7) A deposit made on September 29, 2021 for $2,900 did not appear on the bank statement. 8) A bank debit memo indicated an NSF cheque for $700 relating to the account receivable of Theodore Childress. Instructions a) Prepare a bank reconciliation for Highgate Security at September 30, 2021. b) Prepare all journal entries required for Highgate Security's September 30, 2021 bank reconciliation.

Answer 1

Bank Reconciliation Statement
Balance as per bank statement		6417
Add:
Deposits in transit			2900
Sub total				9317
Less:
Outstanding checks			2045
Adjusted balance as per bank statement	7272
Balance as per Books		5422
Add:
EFT rent deposit			1700
Wrongly recording of check		900
Sub total				8022
Less:
Service charges			50
NSF check			700
Adjusted as per Books		7272
Journal entries
S.no.	Accounts title and explanations		Debit $	Credit $
a.	Cash				1700
	Rent revenue				1700
	(fo EFT transfer)
b.	Cash				900
	Accounts payable				900
	(for wrongly recording the check)
c.	Misc. expense			50
	Cash					50
	(for service charges)
d.	Accounts receivable			700
	Cash					700
	(for NSF check)