On 30 April 2020 Chen & Chan Ltd had a cash balance as per company records...

On 30 April 2020 Chen & Chan Ltd had a cash balance as per company records of $5,644.50 debit. The bank statement from Brisbane Bank on that date showed a credit balance of $7,825.35. A comparison of the statement with the cash account revealed the following facts:

The bank statement included a debit entry of $60 for bank fees.
Unpresented cheques at 30 April totalled $1,276.25, and outstanding deposits were $795.40.
Included with the cheques paid was a cheque issued by Smith Pty Ltd to R. Thomas for $600 that was incorrectly charged to Chen and Chan Ltd by the bank.
A $3,000 note receivable was collected by the bank for Chen & Chan Ltd on 30 April plus $80 interest. The bank charged a collection fee of $20. No interest has been accrued on the note.
On 30 April the bank statement showed a dishonoured cheque of $700 that had been issued by C. Rogers, a customer to Chen & Chan Ltd.

Required:

Prepare the bank reconciliation for Chen & Chan Ltd as at 30 April 2020.
Prepare the necessary adjusting entries for Chen & Chan Ltd as at 30 April 2020.
Narrations are not required.

Solutions

Expert Solution

Bank Reconciliation Statement
Balance as per bank statement	7825.35	balance as per books		5644.5
Add:				Add:
Deposits in transit		795.4	Note collection (3000+80-20)	3060
Check wrogly charged	600
Subtotal			9220.75	Subtotal			8704.5
Less:				Less:
Outstanding checks		1276.25	Service charges paid		60
				NSF check		700
Adjusted balance as per bank	7944.5	Adjusted balance as per books	7944.5

Adjusting entries:
S.no.	Accounts title and explanations		Debit $	Credit $
a.	Cash account			3060
	Collection charges			20
	Notes receivable				3000
	Interest revenue				80
	(for notes collected)
b.	Misc. expense			60
	Cash account				60
	(for service charges levied)
c.	Accounts receivable			700
	Cash account				700
	(for NSF check recorded)

ekkarill92 answered 2 years ago

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