Question

Riverbed Spa shows a general ledger balance for the Cash account of $5,227.95 on June 30 and the bank statement as of that date indicates a balance of $4,450.00. When the statement was compared with the cash records, the following facts were determined:

1. There were bank service charges for June of $34.00.

2. A bank memo stated that Bao Dai’s note for $900 and interest of $46.00 had been collected on June 29, and the bank had charged $6.30 for the collection Any interest revenue has not been accrued.

3. Deposits in transit June 30 were $3,890.00.

4. Cheques outstanding on June 30 totalled $2,176.05.

5. On June 29, the bank had charged Riverbed Spa’s account for a customer’s NSF cheque amounting to $453.30.

6. A customer’s cheque received as a payment on account of $90 had been entered as $60 in the cash receipts journal by Riverbed Spa on June 15.

7. Cheque no. 742 in the amount of $491 had been entered in the books as $419, and cheque no. 747 in the amount of $58.40 had been entered as $584.00. Both cheques were issued as payments on account.

8. In May, the bank had charged a $28.00 Wella Spa cheque against the Riverbed Spa account. The June bank statement indicated that the bank had reversed this charge and corrected its error.

part (a) Prepare a bank reconciliation at June 30. (List items that increase balance as per bank & books first. Round answers to 2 decimal places, e.g. 52.75.)

(b) Write required journal entries

Answer 1

bank Reconciliation Statement:
Balance as pr bank Statement				4450
Add
Deposits in transit				3890
				8340
Less:
Outstanding checks				2176.05
Adjusted balance as per bank Statement				6163.95
balance as per books				5227.95
Add
Collection of notes				939.7
Customer check ronly recorded				30
Error in recording the check				525.6
				6723.25
Less:
Service charges				34
NSf check				453.3
Error in recording the check				72
Adjusted balance as per Books				6163.95
Journal entries:
S.no.	Accounts title and explanations				Debit $	Credit $
a.	Cash account Dr.				939.7
	Misc expenses Dr.				6.3
	Note receivable					900
	Interest revenue					46
b.	Cash account Dr.				30
	Accounts receivable					30
c.	Cash account Dr.				525.6
	Accounts payable					525.6
d.	Misc expense Dr.				34
	Cash account					34
e.	Accounts receivable Dr.				453.3
	Cash account					453.3
f.	Accounts payable Dr.				72
	Cash account					72