Question

Problem 7-5A (Part Level Submission)

Ivanhoe Company of Emporia, Kansas, spreads herbicides and applies liquid fertilizer for local farmers. On May 31, 2017, the company’s Cash account per its general ledger showed a balance of $6,858.90.

The bank statement from Emporia State Bank on that date showed the following balance.

EMPORIA STATE BANK
Checks and Debits		Deposits and Credits		Daily Balance
XXX		XXX		5-31 7,088.00

A comparison of the details on the bank statement with the details in the Cash account revealed the following facts.

1.		The statement included a debit memo of $64.00 for the printing of additional company checks.
2.		Cash sales of $907.15 on May 12 were deposited in the bank. The cash receipts journal entry and the deposit slip were incorrectly made for $957.15. The bank credited Ivanhoe Company for the correct amount.
3.		Outstanding checks at May 31 totaled $267.25, and deposits in transit were $1,904.15.
4.		On May 18, the company issued check No. 1181 for $686.00 to H. Moses, on account. The check, which cleared the bank in May, was incorrectly journalized and posted by Ivanhoe Company for $668.00.
5.		A $2,834.00 note receivable was collected by the bank for Ivanhoe Company on May 31 through electronic funds transfer.
6.		Included with the canceled checks was a check issued by Tomins Company to C. Pernod for $336.00 that was incorrectly charged to Ivanhoe Company by the bank.
7.		On May 31, the bank statement showed an NSF charge of $500.00 for a check issued by Sara Ballard, a customer, to Ivanhoe Company on account.

a.)Prepare the bank reconciliation at May 31, 2017

b.) Prepare the necessary adjusting entries for Blossom Company at May 31, 2017. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Answer 1

Part A

Ivanhoe Company

bank Reconciliation

May 31, 2017

Cash balance as per bank statement		7088
Add:
Deposits in transit	1904.15
Bank error	336
		2240.15
		9328. 15
Less: Outstanding checks		267.25
Adjusted cash balance per book		9060.90
Cash balance per books		6858.90
Add: electronic funds transfer received		2834
		9692.90
Less:
Check printing charge	64
Error in deposit (957.15-907.15)	50
Error in recording check (686-668)	18
NSF check	500
		632
Adjusted cash balance per books		9060.90

Part B

Date	account titles and explanation	debit	credit
May 31	cash	2834
	Notes receivable		2834
	(to record collection of notes receivable by bank)
May 31	accounts receivable	500
	Cash		500
	(to record NSF check)
May 31	sales	50
	Cash		50
	(to correct error in deposit)
May 31	accounts payable	18
	Cash		18
	(to correct error in recording check)
May 31	Bank charge expense	64
	Cash		64
	(to record a charge for printing company check)