Question

1. The bank statement of Green’s Floral shows a final balance of $8,966 as of October 3 The present balance of the cash account in the ledger, after Green’s accountant has posted from the journal, is $8,030.50. The accountant took the following steps: 1) Verified that canceled checks were recorded correctly on the bank statement. 2) Discovered that a deposit of $1,003 made on Oct 31 was not recorded on the bank statement. 3) Noted outstanding checks: no. 1916, $461; no. 2022, $119; no. 2023, $827; no. 2024, $67. 4) Noted that a credit memo for a note collected by the bank from Lee and Brock, $600 principle plus $6 interest, was not recorded in the journal. 5) Found that check no. 2001 for $523 payable to Davis, Inc., on account, was recorded in the journal as $532. (The correct amount is $523.) 6) Noted that a debit memo for a collection charge and service charge of $5.50 was not recorded in the journal. 7) Noted that a debit memo for an NSF check for $125 from M.D. Scott was not recorded. 8) Noted that a $20 monthly bank fee, was not recorded.

How much cash does Green’s Floral have at the end of October. You must support your answer. Journalize any and all necessary journal entries.

Answer 1

Solution:

Green’s Floral
Bank Reconciliation - October 31
Bank's Cash balance		Company's cash balance
Particulars	Amount	Particulars	Amount
Ending balance as per Bank Statements	$8,966.00	Ending Balance as per cash books	$8,030.50
Additions:		Additions:
Outstanding Deposits	$1,003.00	Note collection (Including interest)	$606.00
		Incorrect recording of check 2001	$9.00
Deductions:		Deductions:
Outstanding Checks (Check 1916, 2022, 2023 and 2024)	$1,474.00	Service Charge	$5.50
		NSF Check	$125.00
		Bank Fee	$20.00
Up to date cash balance as per bank	$8,495.00	Up to date cash balance as per books	$8,495.00

Journal Entries - Green’s Floral
Date	Particulars	Debit	Credit
31-Oct	Cash Dr	$606.00
	To Note receivables		$600.00
	To Interest revenue		$6.00
	(To record note collection by bank)
31-Oct	Cash Dr	$9.00
	To Accounts payable		$9.00
	(To record correction entry for check 2001)
31-Oct	Expenses for collection Dr	$5.50
	To Cash		$5.50
	(To record collection charges)
31-Oct	Accounts receivables Dr	$125.00
	To Cash		$125.00
	(To record NSF check from customer)
31-Oct	Service fees expense Dr	$20.00
	To Cash		$20.00
	(Being Bank Fee debited by bank)