Question

Co receives April 2017 bank statement showing $7000 on deposit. The Co’s books show the account to have a cash balance of $6590. The reconciliation process May 31st revealed the following: of $3000 deposited over the month, the bank had not yet received the last deposit of $500 made on May 30th. The bank also collected $100 on a $90 Note Receivable plus $10 interest. Three checks had written for a total of $1000 had not yet cleared the bank. Furthermore, one of the checks written for $100 was incorrectly recorded by Co as having been $10. A deposit Co made for $50 was returned by the bank for Non-Sufficient Funds. Finally, the bank charged a $50 fee for the checking account.

A) Reconcile the cash balance per the bank with the cash balance per the Co for April.

B) Journalize the adjustments Co recorded on its books from the reconciliation.

Answer 1

	COMPANY
	Bank Reconciliation
	Apr-17
	Bank Statement Balance		7,000	Book Balance		6,590
	Add:			Add:
	Deposit in Transit	500		Proceeds of note less collection charge	90
				Int Revenue	10
	Deduct:			Deduct:
				SERVICE CHARGE	50
	Outstanding Checks	1,000		Error in recording check	90
				NSF Check	50
	Adjusted Bank Balance		6,500	Adjusted Book Balance		6,500
	Journal Entries
	General Journal	Debit	Credit
1)	Accounts Payable	90
	Cash		90
	(To record error correction expense)
2)	CASH	100
	Note Receivable		90
	Interest Revenue		10
	(To record note receivable)
3)	Accounts Receivable	50
	Cash		50
	(To record NSF Check)
4)	Bank Carges	50
	Cash		50
	(To record bank charges)