QUESTION FIVE The cash balance of Bison Corporation was 14,426 as at October 31, 2020. The...

QUESTION FIVE

The cash balance of Bison Corporation was 14,426 as at October 31, 2020. The balance of bank statement on the same day was $9,926. Following summarizes the differences between bank and books:

Deposits in transit as at September 30 was $1,108.
Deposits recorded in the books and bank during October were 9,630 and $7,410.
Outstanding cheques as at October 31 amounted to $136.
Electronic receipts from customers totaled $814, but these receipts have not yet been recorded by Bison in October.
Interest revenue earned in October totaled $307 and it hasn’t been recorded by Bison.
The bank returned an NSF cheque in the amount of $2,211 that deposited on October 13. The cheque was a payment on a customer’s account.
The bank charged Bison $188 for services in October, including $158 for bank service changes and $30 for processing the NSF cheque.
The bank made a mistake in processing a payment of $522 as $552.

reconciliation as at October 31, 2020.

[Q1. ] Prepare any necessary journal entries for bank reconciliation as at October 31, 2020.

[Q2] What is the reconciled balance of cash as at October 31, 2020?

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Solutions

Expert Solution

(Q1)

Account name	DEBIT	CREDIT
Cash book	$814
Accounts Recievable(To record reciepts from customer)		$814

Cash book is debited as Cash is recieved which increases cash asset therefore debited

Accounts Recievable is credited as The amount owed by customers is now Reduced So, the Accounts recievable asset is now reduced therefore credited

Account name	DEBIT	CREDIT
Cash book	$307
Interst Revenue(Interest Revenue earned)		$307

Cash book is debited as cash asset is increased as a result of Interest revenue

Interest revenue is credited as it is an income and increase in it is therefore credited

Account name	DEBIT	CREDIT
Accounts Recievable	$307
Cash Book (Reversal due to NSF cheque)		$307

Accounts recieavable is debited as this would have been previously credited when the customer paid the cheque as it is now NSF , The customer account should be added back therefore debited

Cash book is credited as it would have been previously added when the customer paid cheque. As it is NSF cheque now it should be Deducted therefore credited

Account name	DEBIT	CREDIT
Bank service charges	$158
NSF check Processing charges	$30
Cash book		$188

The service charge and NSF charge is debited as it is an expense and increase in it is therefore debited

Cash book is credited as the payment of Expenses lead to reduction in Cash so it is therefore credited

(Q2)

Cash balance as per bank statement		$9926
ADD:
Deposit in transit	$1108
Deposit in process to be recorded($9630-$7410)	$2220
Error made in processing payment	$30	$3358
LESS:
Outstanding cheques	$136	($136)

ADJUSTED BALANCE		$13148

Deposit in transit is added as this would soon be recieved by bank and will increase the cash balance
Deposit in process is added as this would soon be processed by the bank and will increase cash balance
Error made was added because an additional $30($552-$522) was debited by the bank so now it should be added back
Outstanding cheques is deducted as this would soon be presented at the bank and would result in decrease of cash balance

Cash balance as per Cash book		$14426
ADD:
Electronic reciepts from customers	$814
Interest Revenue earned	$307	$1121
LESS:
Bank and NSF Charges	$188
NSF cheque	$2211	($2399)
ADJUSTED BALANCE		$13148

Electronic reciept was added as this increases the cash balance
Interest Revenue is added as this is an income and it increases the cash balance
Bank and NSF charges are Deducted as these are expenses which reduces cash balance
NSF cheque is Deducted as this would have been previously Recorded to increase cash, As it is now NSF the amount should be deducted from Cash balance

So, the reconciled Cash balance is $13148

ekkarill92 answered 1 year ago

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