Question

Preparing Bank reconciliation & any journal entries;

The following information is for Neopolitan Ltd in July

1.Cash balance per bank, July 31, $10,670

2. Cash balance per general ledger cash account, July 31, $8,953

3. Bank Service Charge, $40

4. Deposits in Transit, $1,968

5. Electronic receipts from customers in payment of their accounts, $1,276, not previously recorded by the company

6. Outstanding cheques, $2,359

7. Cheque #373 was correctly written in the amount of $890 but was incorrectly recorded by the company’s bookkeeper at $980.

Instructions

a) Prepare the bank reconciliation at July 31

b) Prepare any journal entries required from the reconciliation

Answer 1

Solution a:

Neopolitan Ltd
Bank Reconciliation - July 31
Bank's Cash balance		Company's cash balance
Particulars	Amount	Particulars	Amount
Ending balance as per Bank Statements	$10,670.00	Ending Balance as per cash books	$8,953.00
Additions:		Additions:
Outstanding cash receipt	$1,968.00	Electronic receipt from customer	$1,276.00
		Incorrect recording of check no 373 ($980 - $890)	$90.00
Deductions:		Deductions:
Outstanding Checks	$2,359.00	Bank Service Charge	$40.00
Up to date cash balance as per bank	$10,279.00	Up to date cash balance as per books	$10,279.00

Solution b:

Journal Entries - Neopolitan Ltd
S. No.	Particulars	Debit	Credit
1	Cash Dr	$1,276.00
	To Accounts Receivables		$1,276.00
	(Being EFT deposit by customer)
2	Cash Dr	$90.00
	To Accounts Payable		$90.00
	(To record correction entry for check no 373)
3	Service charges Dr	$40.00
	To Cash		$40.00
	(Being service charges debited by bank)