Question

The following information is available for the Savvy Company for the month of June. On June 30, after all transactions have been recorded, the balance in the company's Cash account has a balance of $17,202. The company's bank statement shows a balance on June 30 of $19,279. Outstanding checks at June 30 total $2,984. The bank collected $770 on a note receivable that is not yet recorded by Savvy Company. A $67 NSF check from a customer, J. Maroon is shown on the bank statement but not yet recorded by the company. A deposit placed in the bank's night depository on June 30 totaling $1,675 did not appear on the bank statement. Comparing the checks on the bank statement with the entries in the accounting records reveals that check #3445 for the payment of an account payable was correctly written for $2,450, but was recorded in the accounting records as $2,540. Included with the bank statement was a bank service charge in the amount of $25 . It has not been recorded on the company's books. Prepare the June bank reconciliation for the Savvy Company. Prepare the general journal entries to bring the company's book balance of cash into conformity with the reconciled balance as of June 30.

Answer 1

Solution:

Savvy Company
Bank Reconciliation
Jun-30
Cash balance per Bank	$19,279
Add: Deposit in transit	$1,675
Subtotal	$20,954
Less: Outstanding checks	$2,984
Adjusted Balance per bank	$17,970
Cash balance per General ledger	$17,202
Add: Note collected by bank	$770
Add: Error in recording check as $2540 instead of $2450	$90
Subtotal	$18,062
Less: NSF check	$67
Less: Bank Charges	$25
Adjusted Balance per book	$17,970

Journal Entries
S.No	Particulars	Debit	Credit
a.	Cash	$770
	Note receivable		$770
	(To record note coolected by bank)
b.	Cash	$90
	Accounts payable		$90
	(To correct error in recording check #3445)
c.	Accounts Receivable	$67
	Cash		$67
	(To record NSF Check)
d.	Miscellaneous expense	$25
	Cash		25
	(to record bank service chages)