Question

The Following Information is available for the Tierney Company for the month of November.

*On November 30, after all transactions have been recorded, the balance in the company's Cash account has a balance of $27,202.

*The company's bank statement shows a balance on November 30th of $29,279.

*Outstanding checks at November 30 incude check #3030 in the amount of $1,525 and check #3556 in the amount of $1,459.

*Included with the bank statement was a credit memo in the amount of $770 for an EFT in payment of a customer's account.

*The bank deducted $67 for a NSF check from a customer deposited on November 22.

*A deposit placed in the bank's night depository on November 30 totaled $1,675 and did not appear on the bank statement.

*Examination of the checks on the bank statement with the entries in the accounting records reveals that check #3445 for the payment of an accounting payable was correctly written for $2450, but was recorded in the accounting records as $2540.

*Included with the bank statements was a debit memorandum in the amount of $25 for bank service charges.

Required:

1. Prepare a bank reconciliation as of November 30 for the company.

2. Prepare the appropriate adjusting journal entries.

Answer 1

1.

Tierney Company
Bank Reconciliation
November 30,
Bank statement balance		$ 29,279	Book balance		$ 27,202
Add:			Add:
Deposit in transit		$    1,675	Not collected by bank	$ 770
Sub total		$ 30,954	Error in recording of check # 3445 ($2,540-2,450)	$    90
					$        860
Deduct:Outstanding checks			Sub total		$ 28,062
#3030	$ 1,525		Deduct:
#3556	$ 1,459		NSF Check	$    67
		$    2,984	Bank Service charges	$    25
					$          92
Adjusted bank balance		$ 27,970	Adjusted book balance		$ 27,970

Date	Title	Debit	Credit
Nov-30	Cash	$ 770
	Misc. expenses	$    10
	Note receivable		$ 780
	(To record collection of note by bank after bank charges)
Nov-30	Accounts receivable	$    67
	Cash		$    67
	(To record NSF check)
Nov-30	Mis. Expenses	$    25
	Cash		$    25
	(To record bank service charges)
Nov-30	Cash	$    90
	Accounts payable		$    90
	(To correct error in recoding of check #3345)

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