Question

Novak Spa shows a general ledger balance for the Cash account of $3,974.35 on June 30 and the bank statement as of that date indicates a balance of $4,145.00. When the statement was compared with the cash records, the following facts were determined:

1.		There were bank service charges for June of $33.00.
2.		A bank memo stated that Bao Dai’s note for $897.00 and interest of $42.00 had been collected on June 29, and the bank had charged $7.50 for the collection. Any interest revenue has not been accrued.
3.		Deposits in transit June 30 were $2,890.00.
4.		Cheques outstanding on June 30 totalled $2,141.05.
5.		On June 29, the bank had charged Novak Spa’s account for a customer’s NSF cheque amounting to $498.20.
6.		A customer’s cheque received as a payment on account of $87.00 had been entered as $58.00 in the cash receipts journal by Novak Spa on June 15.
7.		Cheque no. 742 in the amount of $481.00 had been entered in the books as $437.00, and cheque no. 747 in the amount of $34.70 had been entered as $569.00. Both cheques were issued as payments on account.
8.		In May, the bank had charged a $15.50 Wella Spa cheque against the Novak Spa account. The June bank statement indicated that the bank had reversed this charge and corrected its error.

Prepare a bank reconciliation at June 30. (List items that increase balance as per bank & books first. Round answers to 2 decimal places, e.g. 52.75.)

Novak Spa Bank Reconciliation June 30
Bond interest collected by bankDeposits in transitNSF chequeAdjusted cash balance, June 30 per bankOutstanding chequesError on cheque no. 745Error on cheque no. 742Error on cheque no. 747Balance per bank, June 30Error in recording depositNote collectionBank service charges				$
AddLess:                                                                       Bond interest collected by bankError on cheque no. 747Bank service chargesBalance per bank, June 30Note collectionError on cheque no. 745Adjusted cash balance, June 30 per bankNSF chequeOutstanding chequesError on cheque no. 742Error in recording depositDeposits in transit
AddLess:                                                                       Deposits in transitNSF chequeError in recording depositError on cheque no. 747Note collectionBank service chargesError on cheque no. 742Bond interest collected by bankAdjusted cash balance, June 30 per bankOutstanding chequesError on cheque no. 745Balance per bank, June 30
Balance per bank, June 30Deposits in transitBank service chargesError on cheque no. 745Outstanding chequesError on cheque no. 747Note collectionError in recording depositBond interest collected by bankAdjusted cash balance, June 30 per bankNSF chequeError on cheque no. 742				$
NSF chequeOutstanding chequesBalance per books, June 30Bank service chargesError in recording depositError on cheque no. 747Deposits in transitBond interest collected by bankAdjusted balance, June 30 per booksError on cheque no. 742Error on cheque no. 745Note collection				$
AddLess:
Error on cheque no. 742Balance per books, June 30Adjusted balance, June 30 per booksDeposits in transitBond interest collected by bankError on cheque no. 745Error on cheque no. 747Note collectionBank service chargesOutstanding chequesNSF chequeError in recording deposit		$
Deposits in transitBank service chargesError on cheque no. 745Adjusted balance, June 30 per booksOutstanding chequesBalance per books, June 30NSF chequeNote collectionError on cheque no. 742Bond interest collected by bankError on cheque no. 747Error in recording deposit
Error on cheque no. 742Error on cheque no. 745Bond interest collected by bankDeposits in transitError in recording depositNote collectionBalance per books, June 30Adjusted balance, June 30 per booksOutstanding chequesNSF chequeError on cheque no. 747Bank service charges
AddLess:
Error on cheque no. 747Note collectionAdjusted balance, June 30 per booksBalance per books, June 30Deposits in transitError on cheque no. 742Outstanding chequesBank service chargesError in recording depositBond interest collected by bankError on cheque no. 745NSF cheque
Error in recording depositOutstanding chequesDeposits in transitNSF chequeError on cheque no. 747Bank service chargesBond interest collected by bankError on cheque no. 742Balance per books, June 30Adjusted balance, June 30 per booksNote collectionError on cheque no. 745
Error on cheque no. 742Outstanding chequesBank service chargesError on cheque no. 747Adjusted balance, June 30 per booksDeposits in transitNSF chequeNote collectionBalance per books, June 30Error on cheque no. 745Bond interest collected by bankError in recording deposit
Error in recording depositNSF chequeOutstanding chequesBalance per books, June 30Error on cheque no. 742Error on cheque no. 745Error on cheque no. 747Bank service chargesNote collectionAdjusted balance, June 30 per booksDeposits in transitBond interest collected by bank				$

Prepare any journal entries that are needed to adjust the Cash account at June 30. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round answers to 2 decimal places, e.g. 52.75.)

Date	Account Titles and Explanation	Debit	Credit
June 30
	(To correct error and record cash receipts)
June 30
	(To record NSF cheque and other cash payments)

Answer 1

	Novak Spa
	Bank Reconciliation
	Jun-30
	Unadjusted bank balance	4145
	Add: Deposit in Transit	2890
	Less: Outstanding checks	-2141.05
	True Cash balance	4893.95
	Unadjusted book balance	3974.35
	Add: Notes collected	897
	Add: Interest on note collected	42
	Add: Error Rectification	29	(Sr. No. 6 )
	Add: Error Rectification(Check nO. 747)	534.3	(Sr. No. 7 )
	Less: Error Rectification(Check nO. 742)	-44	(Sr. No. 7 )
	Less: Bank service charges	-40.5	(33+7.5)
	Less: NSF Check	-498.2
	True Cash balance	4893.95
	Journal entry
	Account NAME	Debit	Credit
	Bank Account	1417.8
	Bank Charges	40.5
	Accounts Payable		490.3
	Accounts receivable		29
	Note receivable		897
	Interest Collected on Notes		42
	(being adjustment entry passed)
	Accounts Receivable	498.2
	To BANK		498.2
	(being NSF Check reversed)
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