Question

1. Merlion Ltd. in Singapore got a bank statement for May 2020, which shows the following data in part. (Currency in Singaporean dollar, S$.)

Balance 5/1      S$126,500                      Balance 5/31                      S$142,800

Debit memorandum:                               Credit memorandum:

NSF check       S$1,750                        Collection of note receivable              S$5,050

The cash balance per books at May 31 is S$133,190. Further review of the bank statement reveals the following.

1. The NSF check was from Malacca Co., a customer.
2. The note collected by the bank was a S$5,000, 3-month, 12% note. The bank charged a S$100 collection fee. No interest has been accrued.
3. Outstanding checks at May 31 total S$24,100.
4. Deposits in transit at May 31 total S$17,520.
5. A Merlion Ltd. check for S$3,520, dated May 10, cleared the bank on May 25. The company recorded this check, which was a payment on account, for S$3,250.

Instructions (30%):

(a) Prepare a bank reconciliation at May 31.

(b) Journalize the entries required by the reconciliation.

Answer 1

Requirement:a

Merlion Ltd.
Bank Reconciliation Statement
As on May. 31, 2020
Cash balance according to bank statement		$ 142,800.00
Add:
Deposit in transit	$       17,520	$         17,520
Deduct:
Outstanding Checks	$     (24,100)
		$       (24,100)
Adjusted cash balance per bank		$       136,220
Cash balance according to company`s records		$       133,190
Add:
Note Collection for depositor [5000+(5000*12%*3/12)]	$         5,150	$            5,150
Deduct:
NSF Check	$       (1,750)
Bank Service Charges	$           (100)
Book Errors overstated the book balance [3520-3250]	$           (270)	$         (2,120)
Adjusted cash balance per books		$       136,220

Requirement:b

Account Titles and Explanation	Debit	Credit
Cash	$    5,150
Notes Receivables		$    5,000
Interest Receivable [5000*12/100*3/12]		$        150
(To record collection of notes along with interest)
Accounts Receivables	$    1,750
Cash		$    1,750
(To record NSF check)
Bank Charges	$        100
Cash		$        100
( To record bank service charges)
Accounts Payable [3520-3250]	$        270
Cash		$        270
( To record error correction in account payable)