Question

The bank portion of the bank reconciliation for the Fixar Company at January 31,2018 is as follows:

                                                                                       FIXAR COMPANY                                                                                                               

                                                                                       Bank Reconciliation                                                                                  

                                                                                      January 31, 2018

                                                                                         

                                                                                                                                                                                                                

                  Cash balance per bank                                                                                                                 $13,581.90

                  Add: Deposits in transit                                                                                                                       1,432.80

                                                                                                                                                                                      15,014.70

Less:        Outstanding checks

                                                   Check Number Check Amount

                                                                     3351        $1,089.20

                                                                     3370                930.40

                                                                     3371                844.50

                                                                     3372                734.90

                                                                     3374            1,050.00

                                                                     3375            1,396.60                                                                                   6,045.60

                                                                                                           

                   Adjusted cash balance per bank                                                                                                             $8,969.10

The adjusted cash balance per bank agreed with the cash balance per books at January 31^st.

The February bank statement showed the following checks and deposits.

                                                                                             Bank Statement

                                                                         Checks                                                                                                                Deposit

                                               Date                Number                     Amount                                          Date                         Amount

                                               2-1                       3370                   $ 930.40                                        2-1                     $1,432.80

                                               2-2                       3371                       844.50                                            2-4                         1,451.50

                                               2-4                       3374                   1,050.00                                            2-8                            890.10

                                               2-6                       3376                   2,830.00                                               2-13                    2,575.00

                                               2-7                       3377                       600.00                            2-18                                    1,472.70

                                               2-10                     3379                   1,740.00                                    2-20                         2,836.00

                                               2-15                     3380                   1,330.00                                        2-25                         2,567.30

                                               2-18                     3381                       695.40                                                 2-27                           2,350.00

                                           . 2-27                    3383                       425.75                                2-28                         1,186.00

                                               2-28                     3386                       750.00                                         Total                   $16,761.40

                                               2-28                     3389                   1,210.45

                                               2-28                     3392                       542.00

                                                                             Total              $12,948.50

The cash records per books for February show the following information:

Cash Payments Journal                                                                                                    Cash Receipts Journal

                      Date         Number          Amount        Date             Number             Amount                                       Date                  Amount

                      2-1                3376      $2,830.00        2-20                 3384               730.75                                    2-3                   $1,451.50

                      2-2                3377            600.00        2-22                 3385               882.30                                    2-7                                   890.10

                      2-2            3378            538.20        2-23                 3386               750.00                                   2-12                     2,575.00

                      2-4                3379        1,470.00        2-24                 3387               526.70                                      2-17                     1,472.70

                      2-8                3380        1,330.00        2-25                 3388               750.00                                      2-19                     2,863.00

                      2-10              3381         695.40   2-26                 3389            1,210.45                                      2-24                     2,567.30

                      2-15              3382            547.00        2-27                 3392               542.00                                      2-26                     2,350.00

                      2-18              3383            425.75        Total                                 $13,828.55                                      2-27                     1,186.00

                                                                                                                                                                                              2-28                     2,456.00

                                                                                                                                                                                         Total                $17,811.60

The bank statement contained two bank memoranda:

1. A credit of $1,895.00 for the collection of a $1,800 note for Fixar Company plus interest of $115 and less a collection fee of $20.

Fixar Company accrued interest to the maturity of the note.

2. A debit for the printing of additional company checks, $75.00.

                                                                    

At February 28 the cash balance per books was $11,118.80 and the cash balance per the bank statement was $17,381.45.

The bank did not make any errors but two errors were made by Fixar Company.

Instructions:

(a) Prepare the bank reconciliation at February 28, 2018

(b) Prepare the adjusting entries based on the reconciliation. (Note. The correction of any errors pertaining to recording checks should be made to Accounts Payable. The correction of any errors relating to recording cash receipts should be made to Accounts Receivable.)

Answer 1

Solution:

PART-1)

BANK RECONCIALATION STATEMENT
Cash Balance as per bank		$17,381.45
Plus: Deposit in transit		$2,456.00
Minus: Outstanding Checks
Check number: 3351	$1,089.20
Check number: 3372	$734.90
Check number: 3375	$1,396.60
Check number: 3378	$538.20
Check number: 3382	$547.00
Check number: 3384	$730.75
Check number: 3385	$882.30
Check number: 3386	$750.00
Check number: 3387	$526.70	$7,195.65
Adjusted Cash Balance as per bank		$12,641.80
Cash balance as per Cash Book		$11,118.80
Plus: Collection of Note receivable	$1,800.00
Interest on Note receivable	$115.00	$1,915
Minus: Collection fee on note receivable	$20.00
Deposit of 19-2 entered wrongly	$27.00
Check no. 3379 entered wrong	$270.00
Printing charges of check book	$75.00	$392.00
Adjusted Cash Balance as per bank		$12,641.80

?

PART-2)

	Debit	Credit
Cash	1800
Notes receivable		1800
Cash	115
Interest revenue		115
Office-expense	20
Cash		20
Accounts Receivable	27
Cash		27
Accounts Payable	270
Cash		270