Question

The bank portion of the bank reconciliation for Blossom Company at October 31, 2021, was as follows:

BLOSSOM COMPANY Bank Reconciliation October 31, 2021
Cash balance per bank				$11,000
Add: Deposits in transit				1,500
				12,500
Less: Outstanding cheques
#2451		$1,100
#2470		850
#2471		780
#2472		450
#2474		1,000		4,180
Adjusted cash balance per bank				$8,320

The adjusted cash balance per bank agreed with the cash balance per books at October 31. The November bank statement showed the following:

BLOSSOM COMPANY Bank Statement November 30, 2021
		Cheques and Other Debits
Date		Number			Amount			Deposits			Amount
Oct. 31											$11,000
Nov. 3		2470			$850			$1,500			11,650
4		2471			780						10,870
5		2475			1,641			1,150			10,379
6		2474			1,000						9,379
7		2476			1,620			990			8,749
10		2477			600						8,149
13								2,575			10,724
14		2479			1,750						8,974
18		2480			1,330			1,350			8,994
21								1,722			10,716
25		NSF			220			2,567			13,063
26		2481			695						12,368
27								1,650			14,018
28		2486			900			EFT 2,440			15,558
28		2483			500			1,186			16,244
30		LN			2,210						14,034

Additional information from the bank statement:

1.		The EFT of $2,440 is an electronic transfer from a customer in payment of its account. The amount includes $10 of interest that Blossom Company had not previously accrued.
2.		The NSF for $220 is a $205 cheque from a customer, Pendray Holdings, in payment of its account, plus a $15 processing fee. The company’s policy is to pass on all NSF service charges to the customer.
3.		The LN is a payment of a note payable with the bank and consists of $210 interest and $2,000 principal.
4.		At November 30, the cash balance per books was $9,799. The bank did not make any errors.

The cash records per books for November follow. Two errors were made by Blossom Company.

Cash Payments
Date		Number			Amount			Date			Number			Amount
Nov. 3		2475			$1,641			Nov. 18			2482			$590
3		2476			1,260			20			2483			500
4		2477			600			21			2484			800
6		2478			500			24			2485			900
8		2479			1,750			26			2486			900
10		2480			1,330			28			2487			1,100
14		2481			695			Total						$12,566

Cash Receipts
Date		Amount
Nov. 3		$1,150
7		990
12		2,575
17		1,350
20		1,277
24		2,567
27		1,650
28		1,186
30		1,300
Total		$14,045

1 Prepare a bank reconciliation at November 30. (List items that increase balance as per bank & books first.)

2 Prepare the necessary adjusting entries at November 30. (Note: The correction of any errors in the recording of cheques should be made to Accounts Payable. The correction of any errors in the recording of cash receipts should be made to Accounts Receivable.) (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Answer 1

1.

Bank Reconciliation
Balance as per bank statement		$   14,034.00
Add :
Deposit in Transit		$     1,300.00
Deduct :
Checks Outstanding
#2451	$     1,100.00
#2472	$        450.00
#2478	$        500.00
#2482	$        590.00
#2484	$        800.00
#2485	$        900.00
#2487	$     1,100.00	$     5,440.00
Corrected Cash Balance		$     9,894.00
Balance as per books		$     9,799.00
Add :
EFT	$     2,440.00
Error in Recording Deposit	$        445.00	$     2,885.00
Deduct :
Error in recording check	$        360.00
Loan Payment	$     2,210.00
Bank Charges	$           15.00
NSF Check	$        205.00	$     2,790.00
Adjusted Cash Balance		$     9,894.00

2.

Account Titles	Debit	Credit
Cash	$           2,440
Accounts Receivable		$           2,430
Interest Revenue		$                10
Cash	$              445
Accounts Receivable / Sales Revenue		$              445
Accounts Payable	$              360
Cash		$              360
Notes Payable	$           2,000
Interest Expense	$              210
Cash		$           2,210
Accounts Receivable	$              205
Bank Charges	$                15
Cash		$              220