Question

Problem 6-4A Preparing a bank reconciliation and recording adjustments LO P3

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The following information is available to reconcile Branch Company’s book balance of cash with its bank statement cash balance as of July 31.

  

1. On July 31, the company’s Cash account has a $25,636 debit balance, but its July bank statement shows a $27,925 cash balance.
2. Check No. 3031 for $1,480, Check No. 3065 for $516, and Check No. 3069 for $2,248 are outstanding checks as of July 31.
3. Check No. 3056 for July rent expense was correctly written and drawn for $1,260 but was erroneously entered in the accounting records as $1,250.
4. The July bank statement shows the bank collected $5,500 cash on a note for Branch. Branch had not recorded this event before receiving the statement.
5. The bank statement shows an $805 NSF check. The check had been received from a customer, Evan Shaw. Branch has not yet recorded this check as NSF.
6. The July statement shows a $8 bank service charge. It has not yet been recorded in miscellaneous expenses because no previous notification had been received.
7. Branch’s July 31 daily cash receipts of $6,632 were placed in the bank’s night depository on that date but do not appear on the July 31 bank statement.

Problem 6-4A Part 1

Required:

1. Prepare the bank reconciliation for this company as of July 31.

2. Prepare the journal entries necessary to make the company’s book balance of cash equal to the reconciled cash balance as of July 31. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Answer 1

1.

Bank Reconciliation

July 31

Bank statement Balance		27,925	Book Balance		25,636
Add:			Add:
Deposit in transit	6,632		Bank collection of receivables	5,500
		6,632			5,500
		34,557			31,136
Less:			Less:
Outstanding checks
Check no. 3031	-1,480		NSF check	-805
Check no. 3065	-516		Bank service charges	-8
Check no. 3069	-2,248		Correction of book error	-10
		- 4,244			- 823
Adjusted bank balance		$30,313	Adjusted book balance		$30,313

2)

Journal

a	No journal entry required
b	No journal entry required
c	Rent expense	10
	Cash		10
d	Cash	5,500
	Note receivable		5,500
e	Accounts receivable - Evan Shaw	805
	Cash		805
f	Miscellaneous expense	8
	Cash		8
g	No journal entry required