Question

The bank reconciliation prepared by Gemma Tours on March 31, 2020, appeared as follows:

GEMMA TOURS
Bank Reconciliation
March 31, 2020
Bank statement balance				$	14,600		Book balance	$	32,268
Add:
Deposit of March 31 in transit					20,764
					35,364
Deduct:
Outstanding cheques:
#79	$	1,229
#84		1,867			3,096
Adjusted bank balance				$	32,268		Adjusted book balance	$	32,268

The Cash account in the General Ledger appeared as follows on April 30:

Cash							Acct. No. 101
Date		Explanation	PR	Debit		Credit	Balance
2020
March	31	Balance					32,268.00
April	30		CR11	33,574.00			65,842.00
	30		CD14			43,030.00	22,812.00

A list of deposits made and cheques written during April, taken from the Cash Receipts Journal and Cash Disbursements Journal, is shown below:

Deposits Made
April	7		$	14,001.00
	13			841.00
	18			13,456.00
	23			938.00
	27			1,867.00
	30			2,471.00
Total April Cash Receipts			$	33,574.00

Cheques Written
No.	91		$	1,183
	92			5,157
	93			2,590
	94			3,403
	95			2,856
	96			1,785
	97			8,347
	98			2,856
	99			8,457
	100			6,396
Total April Cash Disbursements			$	43,030

The following bank statement is available for April: (Note: The bank deposits interest into the bank account at the end of every month.)

Bank Statement
To: Gemma Tours						April 30, 2020 Bank of Montreal
Cheques/Charges						Deposits/Credits			Balance
									14,600
#93	04/02		2,509			04/03	20,764		32,855
#92	04/07		5,157			04/07	14,001		41,699
#84	04/13		1,867			04/13	841		40,673
NSF	04/18		6,488			04/18	13,456		47,641
#95	04/23		2,856			04/23	938		45,723
#99	04/27		8,457			04/27	1,867		39,133
#96	04/30		1,785			04/30	2,471		39,819
#97	04/30		8,347			INT	43		31,515
#94	04/30		3,403						28,112
PMT	04/30		9,288						18,824
INT	04/30		33						18,791
SC	04/30		52						18,739
NSF = Not Sufficient Funds		SC = Service Charge				PMT = Principal Payment			INT = Interest

In reviewing cheques returned by the bank, the bookkeeper discovered that cheque #93, for delivery expense, was recorded in the Cash Disbursements Journal incorrectly as $2,590. The NSF cheque was that of customer Laura Clark, deposited in April.

Required:
a. Prepare a bank reconciliation at April 30.     

b. Prepare the necessary journal entries to bring the General Ledger Cash account into agreement with the adjusted balance on the bank reconciliation.

Answer 1

a.

GEMMA TOURS
Bank Reconciliation
April 30, 2020
Bank statement balance		18739	Book balance		22812
Add:			Add:
			Interest credited by bank	43
			Cheque #93 recorded incorrectly ($2590 - $2509)	81	124
		18739			22936
Deduct:			Deduct:
Outstanding cheques			NSF cheque	6488
#79	1229		Principal payment	9288
#91	1183		Interest	33
#98	2856		Bank service charge	52	15861
#100	6396	11664
Adjusted bank balance		7075	Adjusted book balance		7075

b.

Date	General Journal	Debit	Credit
Apr. 30	Cash	43
	Interest revenue		43
	(To record interest earned)
Apr. 30	Cash	81
	Delivery expense		81
	(To rectify error in cheque #93)
Apr. 30	Accounts receivable-Laura Clark	6488
	Cash		6488
	(To reinstate customer account for NSF cheque)
Apr. 30	Payable*	9288
	Cash		9288
	(To record payment of principal amount)
Apr. 30	Interest expense	33
	Cash		33
	(To record payment of principal amount)
Apr. 30	Miscellaneous expense	52
	Cash		52
	(To record bank service charges)

*It is not given in the question to what the principal payment pertains. Kindly select appropriate accounts or write under comments for any clarifications required.