Question

Exercise 7-09

Helen Sells is unable to reconcile the bank balance at January 31. Helen’s reconciliation is shown here.

Cash balance per bank		$4,297.20
Add: NSF check		595.00
Less: Bank service charge		51.50
Adjusted balance per bank		$4,840.70
Cash balance per books		$4,595.20
Less: Deposits in transit		566.50
Add: Outstanding checks		915.00
Adjusted balance per books		$4,943.70

(a) What is the proper adjusted cash balance per bank? (Round answers to 2 decimal places, e.g. 52.75.)

The proper adjusted cash balance per bank

$Enter a dollar amount rounded to 2 decimal places

(b) What is the proper adjusted cash balance per books? (Round answers to 2 decimal places, e.g. 52.75.)

The proper adjusted cash balance per books

$Enter a dollar amount rounded to 2 decimal places

(c) Prepare the adjusting journal entries necessary to determine the adjusted cash balance per books. (Round answers to 2 decimal places, e.g. 52.75. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Date	Account Titles and Explanation	Debit	Credit
Jan. 31	Enter an account title to record NSF check on January 31	Enter a debit amount	Enter a credit amount
	Enter an account title to record NSF check on January 31	Enter a debit amount	Enter a credit amount
	(To record NSF check)
Jan. 31	Enter an account title to record bank service charge on January 31	Enter a debit amount	Enter a credit amount
	Enter an account title to record bank service charge on January 31	Enter a debit amount	Enter a credit amount
	(To record bank service charge)

Answer 1

a	The proper adjusted cash balance per bank          [Refer working note 1]	$3,948.70
b	The proper adjusted cash balance per books        [Refer working note 2]	$3,948.70

.

.

C. Prepare the adjusting journal entries necessary to determine the adjusted cash balance per books

Date	Account Ttitles and Explanation	Debit	Credit
Jan. 31	Accounts receivable	$595
	Cash		$595
	(To record NSF check)
Jan. 31	Bank charges expense	$51.50
	Cash		$51.50
	(To record bank service charges)

.

.

Working note 1 - Computation of adjusted cash balance as per bank
	Amount
Cash balance per bank	$4,297.20
Add: Deposits in transit	$566.50
Less: Outstanding checks	$915.00
Adjusted balance per bank          [$4,297.20 + $566.50 - $915]	$3,948.70

.

.

Working note 2 - Computation of adjusted cash balance as per books
	Amount
Cash balance per books	$4,595.20
Less: NSF check	$595.00
Less: Bank service charge	$51.50
Adjusted balance per books    [$4,595.20 - $595 - $51.50]	$3,948.70