Question

The Brown Company bank statement for September 30, 2019 showed a balance of

$1,681.50. The company's cash account showed a $1,305.20 debit balance. The

following information was also available.

(a) A customer's cheque for $90 marked NSF was returned to Brown Company by the

bank. The bank charged the company's account a $10 processing fee.

(b) The September 30 cash receipts, $1,250, were placed in the bank's night

depository after banking hours on that date and this amount did not appear on the

bank statement.

(c) A $15.10 debit memorandum for cheques printed by the bank was included with the

cancelled cheques.

(d) Outstanding cheques amounted to $1,141.40.

(e) A customer's note for $920 was collected by the bank. A collection fee of $20 was

deducted by the bank.

(f) Included with the cancelled cheques was a cheque for $300, drawn on another

company, The Browne Bros. The Brown Company does not do business with The

Browne Bros

Required:

1. Prepare a bank reconciliation in good form at September 30, 2019.

2. Prepare the necessary journal entries to bring the General Ledger Cash account

into agreement with the adjusted balance on the bank reconciliation.

Answer 1

Solution 1:

Brown Company
Bank Reconciliation - September 30, 2019
Bank's Cash balance		Company's cash balance
Particulars	Amount	Particulars	Amount
Ending balance as per Bank Statements	$1,681.50	Ending Balance as per cash books	$1,305.20
Additions:		Additions:
Outstanding cash receipt	$1,250.00	Notes received	$920.00
Incorrect recording of cheque	$300.00
Deductions:		Deductions:
Outstanding Checks	$1,141.40	NSF Cheque	$90.00
		Printed check charges	$15.10
		Collection Fee of Note	$20.00
		Processing Fee	$10.00
Up to date cash balance as per bank	$2,090.10	Up to date cash balance as per books	$2,090.10

Solution 2:

Adjusting Journal Entries - Brown Company
S. No.	Particulars	Debit	Credit
1	Cash A/c Dr	$920.00
	To Notes Receivables		$920.00
	(Being note collected by bank)
2	Collection Fee Dr	$20.00
	To Cash A/c		$20.00
	(Being Collection Fee debited by bank for collection of Note)
3	Accounts receivables Dr	$90.00
	To Cash A/c		$90.00
	(Being check dishonoured by bank)
4	Processing Fee Dr	$10.00
	To Cash A/c		$10.00
	(Being Processing Fee debited by bank)
5	Check printing charges Dr	$15.10
	To Cash A/c		$15.10
	(Being check printing charges debited by bank)