Question

The bank reconciliation prepared by Gemma Tours on March 31, 2020, appeared as follows:

GEMMA TOURS
Bank Reconciliation
March 31, 2020
Bank statement balance				$	14,600		Book balance	$	32,268
Add:
Deposit of March 31 in transit					20,764
					35,364
Deduct:
Outstanding cheques:
#79	$	1,229
#84		1,867			3,096
Adjusted bank balance				$	32,268		Adjusted book balance	$	32,268

The Cash account in the General Ledger appeared as follows on April 30:

Cash							Acct. No. 101
Date		Explanation	PR	Debit		Credit	Balance
2020
March	31	Balance					32,268.00
April	30		CR11	33,574.00			65,842.00
	30		CD14			43,030.00	22,812.00

A list of deposits made and cheques written during April, taken from the Cash Receipts Journal and Cash Disbursements Journal, is shown below:

Deposits Made
April	7		$	14,001.00
	13			841.00
	18			13,456.00
	23			938.00
	27			1,867.00
	30			2,471.00
Total April Cash Receipts			$	33,574.00

Cheques Written
No.	91		$	1,183
	92			5,157
	93			2,590
	94			3,403
	95			2,856
	96			1,785
	97			8,347
	98			2,856
	99			8,457
	100			6,396
Total April Cash Disbursements			$	43,030

The following bank statement is available for April: (Note: The bank deposits interest into the bank account at the end of every month.)

Bank Statement
To: Gemma Tours						April 30, 2020 Bank of Montreal
Cheques/Charges						Deposits/Credits			Balance
									14,600
#93	04/02		2,509			04/03	20,764		32,855
#92	04/07		5,157			04/07	14,001		41,699
#84	04/13		1,867			04/13	841		40,673
NSF	04/18		6,488			04/18	13,456		47,641
#95	04/23		2,856			04/23	938		45,723
#99	04/27		8,457			04/27	1,867		39,133
#96	04/30		1,785			04/30	2,471		39,819
#97	04/30		8,347			INT	43		31,515
#94	04/30		3,403						28,112
PMT	04/30		9,288						18,824
INT	04/30		33						18,791
SC	04/30		52						18,739
NSF = Not Sufficient Funds		SC = Service Charge				PMT = Principal Payment			INT = Interest

In reviewing cheques returned by the bank, the bookkeeper discovered that cheque #93, for delivery expense, was recorded in the Cash Disbursements Journal incorrectly as $2,590. The NSF cheque was that of customer Laura Clark, deposited in April.

Required:
a. Prepare a bank reconciliation at April 30.     

b. Prepare the necessary journal entries to bring the General Ledger Cash account into agreement with the adjusted balance on the bank reconciliation.

Answer 1

Answwer :-

A. Prepare a Bank Reconciliation at April 30.

Gema Tours
Bank Reconciliation
Bank Statement	Company's Books
Bank Statement Balance		$ 18,739	Book Balance		$22,812
			Add :
			Interest	$43
			Error in Check #93 Recording $2509 recorded as $2590	$81	$124
Less :			Less :
Outstanding Checks			NSF Check : Laura Clark	$ 6488
#79	$1,229		Loan Payment - PMT	$ 9288
#91	$ 1,183		Bank Service Charges	$52
#98	$ 2,856		Bank Interest Charges	$33	$ 15,861
#100	$ 6,396	$ 11,664
Adjusted Balance		$ 7,075	Adjusted Balance		$ 7,075

Answer B.

Journal Entries :-

Particular	Debit	Credit
Cash	$43
Interest Income ( to record Interest Income from Bank )		$43
Cash	$81
Delivery Exp. ( to adjust error in recording check #93 )		$81
Account Receivable	$ 6488
Cash ( to resinstate customer Account )		$ 6488
Loan	$ 9288
Cash ( to record loan repayment )		$ 9288
Interest Exp.	$33
Cash ( to record interest exp.)		$33
Bank Service Charges Exp.	$52
Cash ( to Bank service Charges )		$52