Question

Green Valley Bank sent Comstock Industries its end-of-month bank statement for July. The end of month balance by the bank is $11,237. The statement shows that a deposit for $4,250 is in transit at the end of the statement period. The statement also revealed that checks for $87, $105, and $95 are outstanding. Green Valley collected a $4,000 note receivable plus $120 of interest revenue. The bank charges $20 for the collection service. The bank charges a monthly account fee of $35. The end-of-month balance per company books is $11,135. Required:(1) What is the adjusted balance on the bank reconciliation?(2) Journalize any necessary entries for Comstock Industries based on the bank reconciliation.

Answer 1

Solution 1:

Comstock industries
Bank Reconciliation - July 31
Bank's Cash balance		Company's cash balance
Particulars	Amount	Particulars	Amount
Ending balance as per Bank Statements	$11,237.00	Ending Balance as per cash books	$11,135.00
Additions:		Additions:
Outstanding Deposits	$4,250.00	Note Collection (including interest, net of collection fee)	$4,100.00
Deductions:		Deductions:
Outstanding Checks ($87 + $105 + $95)	$287.00	Service charges	$35.00
Up to date cash balance as per bank	$15,200.00	Up to date cash balance as per books	$15,200.00

Solution 2:

Journal Entries - Comstock Industries
Date	Particulars	Debit	Credit
31-Jul	Cash Dr	$4,100.00
	Expenses for collection	$20.00
	To Notes Receivables		$4,000.00
	To Interest revenue		$120.00
	(Being note collected by bank and collection fee charged)
31-Jul	Miscellenous expenses Dr	$35.00
	To Cash		$35.00
	(Being service charges debited)