Question

Prepare a bank reconciliation for Grace, Inc., as of January 31, from the following information:

(a.) The January 31 cash balance in the general ledger is $5,088.

(b.) The January 31 balance shown on the bank statement is $4,544.

(c.) Checks issued but not returned with the bank statement were No. 435 for $452 and No. 448 for $182.

(d.) A deposit made on January 31 for $1,280 was included in the general ledger balance but not in the bank statement balance.

(e.) Interest credited to the account during January but not recorded on the company's books amounted to $72.

(f.) A bank charge of $24 for printing new checks was made to the account during January. Although the company was expecting a charge, the amount was not Known until the bank statement arrived.

(g.) In the process of reviewing canceled checks, it was determined that a check issued to a supplier in payment of an account payable of $139 was recorded as a $193 cash disbursement.

Prepare the bank reconciliation for Grace, Inc., as of January 31.

21.   Prepare the appropriate entry(ies) for Grace, Inc., related to the bank reconciliation.

Debit                  Credit

Answer 1

Solution:

Grace Inc.
Bank Reconciliation - August 31
Bank's Cash balance		Company's cash balance
Particulars	Amount	Particulars	Amount
Ending balance as per Bank Statements	$4,544.00	Ending Balance as per cash books	$5,088.00
Additions:		Additions:
Outstanding cash receipt	$1,280.00	Interest earned	$72.00
		Incorrect recording of check ($193 - $139)	$54.00
Deductions:		Deductions:
Outstanding Checks ($452 + $182)	$634.00	Service Charge	$24.00
Up to date cash balance as per bank	$5,190.00	Up to date cash balance as per books	$5,190.00

Journal Entries - Grace Inc.
S. No.	Particulars	Debit	Credit
1	Cash Dr	$72.00
	To Interest revenue		$72.00
	(Being interest credited by bank)
2	Cash Dr	$54.00
	To Accounts Payable		$54.00
	(Being incorred recording of check issued to creditor now corrected)
3	Service Charges Dr	$50.00
	To Cash		$50.00
	(Being bank charges debited by bank)