In: Accounting
Infinity Emporium Company received the monthly statement for its bank account, showing a balance of $66,744 on August 31. The balance in the Cash account in the company's accounting system at that date was $71,952. The company's accountant reviewed the statement and the company's accounting records and noted the following.
Required
Prepare adjusting journal entries to record all the necessary adjustments to bring the Cash account to its correct balance.
Since format for bank reconciliation was not given, i have used general format, so if you have any query, kindly comment with your query
a.
Bank Reconciliation | |
Balance as per bank statement | $ 66,744.00 |
Add : | |
Deposit in Transit | $ 12,240.00 |
Deduct : | |
Checks Outstanding | $ 4,560.00 |
Corrected Cash Balance | $ 74,424.00 |
Balance as per books | $ 71,952.00 |
Add : | |
Customer paid by electronic tranfer | $ 3,600.00 |
Deduct : | |
Bank service charges | $ 24.00 |
NSF Check | $ 204.00 |
Bank loan payment | $ 900.00 |
Adjusted Cash Balance | $ 74,424.00 |
b. Actual Cash Available = $74424
c. Adjusted (Corrected) balance of cash can be higher than bank
statement if deposits in transit is higher than checks
outstanding.
Adjusted (Corrected) balance of cash can be higher than balance
shown in company's cash account if positive adjustments i.e.
collections made by bank not recorded in books is higher than
negative adjustments i.e. Charges or payments debited by bank.
d.
Account Titles | Debit | Credit |
Cash | $ 3,600.00 | |
Accounts Receivable | $ 3,600.00 | |
(Cash Collected by bank through electronic transfer) | ||
Bank Charges | $ 24.00 | |
Cash | $ 24.00 | |
(Bank service charges) | ||
Accounts Receivable | $ 204.00 | |
Cash | $ 204.00 | |
(NSF Check) | ||
Note Payable | $ 770.00 | |
Interest Expense | $ 130.00 | |
Cash | $ 900.00 | |
(Loan Payments) |