Question

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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, 2017.

  

On July 31, the company’s Cash account has a $24,754 debit balance, but its July bank statement shows a $26,063 cash balance.

Check No. 3031 for $1,110 and Check No. 3040 for $547 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 $331 and Check No. 3069 for $1,878, 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 $1,230 but was erroneously entered in the accounting records as $1,220.

The July bank statement shows the bank collected $6,500 cash on a noninterest-bearing note for Branch, deducted a $33 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 $10 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 $7,652 were placed in the bank’s night depository on that date but do not appear on the July 31 bank statement.

2.. Prepare the journal entries necessary to bring the company’s book balance of cash into conformity with the reconciled cash balance as of July 31, 2017. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

·         Record the adjusting entry required, if any, related to the July 31 cash balance.

Note: Enter debits before credits.

	Transaction General Journal Debit Credit a.

·         Record the adjusting entry required, if any, related to the outstanding checks.

Note: Enter debits before credits.

	Transaction General Journal Debit Credit b.

·         Record the adjusting entry required, if any, related to Check No. 3056.

Note: Enter debits before credits.

	Transaction General Journal Debit Credit c.

·         Record the adjusting entry required, if any, related to the non-interest-bearing note.

Note: Enter debits before credits.

	Transaction General Journal Debit Credit d.

·         Record the adjusting entry required, if any, related to the NSF check.

Note: Enter debits before credits.

	Transaction General Journal Debit Credit e.

·         Record the adjusting entry required, if any, related to bank service charges.

Note: Enter debits before credits.

	Transaction General Journal Debit Credit f.

·         Record the adjusting entry required, if any, related to the July 31 deposit.

Note: Enter debits before credits.

	Transaction General Journal Debit Credit g.

1. Prepare the bank reconciliation for this company as of July 31, 2017.

BRANCH COMPANY
Bank Reconciliation
July 31, 2017
Bank statement balance			Book balance
Add:			Add:
		0			0
		0			0
Deduct:			Deduct:
		0			0
Adjusted bank balance		$0	Adjusted book balance		$0

Record the adjusting entry required, if any, related to the July 31 cash balance.

Record the adjusting entry required, if any, related to the outstanding checks.

Record the adjusting entry required, if any, related to Check No. 3056.

Record the adjusting entry required, if any, related to the non-interest-bearing note.

Record the adjusting entry required, if any, related to the NSF check.

·         Record the adjusting entry required, if any, related to bank service charges.

Record the adjusting entry required, if any, related to the July 31 deposit.

Answer 1

1
BRANCH COMPANY
Bank Reconciliation
31-Jul-17
Bank statement balance		$26,063	Book balance		$24,754
Add:			Add:
Deposit of July 31	$7,652		Proceeds of note less collection charge	$6,467
		7652			6467
		$33,715			31221
Deduct:			Deduct:
Check No. 3031	1,110		NSF check including fee	805
Check No. 3065	331		Service charge	10
Check No. 3069	1,878		Error (Check 3056)	10
		3319			825
Adjusted bank balance		$30,396	Adjusted book balance		30396
2
Transaction	General Journal	Debit	Credit
a.	No journal entry required
b.	No journal entry required
c.	Rent expense	10
	Cash		10
d.	Cash	6,467
	Collection expense	33
	Notes receivable		6,500
e.	Accounts receivable—E. Shaw	805
	Cash		805
f.	Miscellaneous expenses	10
	Cash		10
g.	No journal entry required