Question

PROBLEM 7.1B

Bank Reconciliation

The cash transactions and cash balances of Dodge, Inc., for November were as follows:

1.) The ledger account for Cash showed a balance at November 30 of $6,750.

2.) The November bank statement showed a closing balance of $4,710.

3.) The cash received on November 30 amounted to $3,850. It was left at the bank in the night depository chute after banking hours on November 30 and therefore was not recorded by the bank on the November statement.

4.) Also included with the November bank statement was a debit memorandum from the bank for $15 representing service charges for November.

5.) A credit memorandum enclosed with the November bank statement indicated that a non-interest-bearing note receivable for $4,000 from Wright Sisters, left with the bank for collection, had been collected and the proceeds credited to the account of Dodge, Inc.

6.) Comparison of the paid checks returned by the bank with the entries in the accounting records revealed that check no. 810 for $430, issued November 15 in payment for computer equipment, had been erroneously entered in Dodge’s records as $340.

7.) Examination of the paid checks also revealed that three checks, all issued in November, had not yet been paid by the bank: no. 814 for $115; no. 816 for $170; no. 830 for $530.

8.) Included with the November bank statement was a $2,900 check drawn by Steve Dial, a customer of Dodge, Inc. This check was marked NSF. It had been included in the deposit of November 27 but had been charged back against the company’s account on November 30.

Instructions:

a.) Prepare a bank reconciliation for Dodge, Inc., at November 30.

b.) Prepare journal entries (in general journal form) to adjust the accounts at November 30. Assume that the accounts have not been closed.

c.) State the amount of cash that should be included in the balance sheet at November 30.

Answer 1

a. Bank Reconciliation Statement
Balance per bank statement, November 30		$   4,710
Add: Deposit in transit		$   3,850
		$   8,560
Deduct: Outstanding checks
no. 814	$    -115
no. 816	$    -170
no. 830	$    -530	$     -815
Adjusted Bank balance		$   7,745
Balance per accounting records, November 30		$   6,750
Add: Note receivable collected by bank		$   4,000
		$ 10,750
Deduct:
Service charge	$      -15
NSF check	$ -2,900
Check recording error (no. 810) (340-430)	$      -90	$ -3,005
Adjusted cash balance		$   7,745

b. Date	Account Titles and Explanation	Debit	Credit
Nov.30	Cash	$ 4,000
	Notes Receivable		$   4,000
30	Computer Equipment	$        90
	Bank Service Charges	$        15
	Accounts Receivable	$ 2,900
	Cash		$   3,005
c	Adjusted cash balance		$   7,745