Question

Problem 6-4A Preparing a bank reconciliation and recording adjustments LO P3 [The following information applies to the questions displayed below.] The following information is available to reconcile Branch Company’s book balance of cash with its bank statement cash balance as of July 31, 2017. On July 31, the company’s Cash account has a $27,497 debit balance, but its July bank statement shows a $27,233 cash balance. Check No. 3031 for $1,482 and Check No. 3040 for $558 were outstanding on the June 30 bank reconciliation. Check No. 3040 is listed with the July canceled checks, but Check No. 3031 is not. Also, Check No. 3065 for $382 and Check No. 3069 for $2,281, both written in July, are not among the canceled checks on the July 31 statement. In comparing the canceled checks on the bank statement with the entries in the accounting records, it is found that Check No. 3056 for July rent expense was correctly written and drawn for $1,270 but was erroneously entered in the accounting records as $1,250. The July bank statement shows the bank collected $8,000 cash on a noninterest-bearing note for Branch, deducted a $45 collection expense, and credited the remainder to its account. Branch had not recorded this event before receiving the statement. The bank statement shows an $805 charge for a $795 NSF check plus a $10 NSF charge. The check had been received from a customer, Evan Shaw. Branch has not yet recorded this check as NSF. The July statement shows a $25 bank service charge. It has not yet been recorded in miscellaneous expenses because no previous notification had been received. Branch's July 31 daily cash receipts of $11,514 were placed in the bank's night depository on that date but do not appear on the July 31 bank statement.

Answer 1

BRANCH COMPANY
Bank Reconciliation
July 31, 2017
Bank statement balance		27,233	Book balance		27,497
Add			Add
Deposit of July 31	11,514		Proceeds of note less collection charge	7,955
		11,514			7,955
		38,747
Deduct:			Deduct:
Check No. 3031	1,482		NSF check including fee (795+10)	805
Check No. 3065	382		Service charge	25
Check No. 3069	2,281		Error (Check 3056) ($1270-$1250)	20
		4,145			850
Adjusted bank balance		34,602	Adjusted book balance		34,602

Transaction	General Journal	Debit	Credit
a.	No journal entry required
b.	No journal entry required
c.	Rent expense	20
	Cash		20
d.	Cash	7,955
	Collection expense	45
	Notes receivable		8,000
e.	Accounts receivable—E. Shaw	805
	Cash		805
f.	Miscellaneous expenses	25
	Cash		25