Question

1. Thunder Buddies Inc., a talking teddy bear manufacturer, needs your assistance in reconciling its bank. The company’s books show a cash balance of $1,207.95 on October 31 while the October bank statement shows an ending balance of $1,735.53. An examination of the company’s records and the bank statement provide you with the following information.
   1. A deposit of $133.00 made on October 31 does not appear on the bank statement.
   2. Checks written in October but not included on the October bank statement totaled $595.59.
   3. Bank shows a $140.00 note receivable collected from TED, a customer, on October 30^th.
   4. Bank shows $7.81 of dividend income wired from the McFarlane investment account.
   5. Bank charged your firm $6.25 for service fees.
   6. Bank returned one of your customer’s checks (Sam J. Jones) for $64.07 stamped “NSF” and charged us a fee of $17.50 for the inconvenience.
   7. You discover that you recorded check #7322 as $311 when it was really for $131 in payment of an accounts payable.
   8. You discover that the bank incorrectly charged your account for $175 for a different company’s check (Flash Gordon Enterprises).

Please prepare the bank reconciliation and record all required adjusting journal entries. Please label your bank reconciliation amounts for ease of grading.

Answer 1

ADJUSTMENT	PARTICULARS	AMOUNT
	Ending Bank Balance	$ 1,735.53
add:	Deposit in transit	$     133.00
less:	Uncleared Cheques	$   (595.59)
add:	Incorrecly charged	$     175.00
A	Adjusted Bank Balance	$ 1,447.94
	Ending Cashbook Balance	$ 1,207.95
add:	Note receivable collected	$     140.00
add:	Dividend Income	$         7.81
add:	Bank Charges	$        (6.25)
less:	NSF Cheques	$      (64.07)
less:	Inconvinience Fees	$      (17.50)
add:	Error in check	$     180.00
B	Adjusted Cashbook Balance	$ 1,447.94
Entries are rerqiured for correction in cashbook only, which are as under.
Adjusting Journal Entries
1	Cash	$     140.00
	Notes Receivable		$      140.00
2	Cash	$         7.81
	Dividend Income		$           7.81
3	Expenses	$         6.25
	Cash		$           6.25
4	Account Receivables	$       64.07
	Expenses	$       17.50
	Cash		$        81.57
5	Cash	$     180.00
	Expenses		$      180.00

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