Question

The bank reconciliation prepared by Gemma Tours on March 31, 2017, appeared as follows:

Gemma Tours
Bank Reconciliation
March 31, 2017
Bank statement balance		$15,500	Book balance	$34,257
Add:
Deposit of March 31 in transit		22,044
		$37,544
Deduct:
Outstanding cheques:
#79	$1,306
#84	1,981	3,287
Adjusted bank balance		$34,257	Adjusted book balance	$34,257

The Cash account in the General Ledger appeared as follows on April 30:

Cash					Acct. No. 101
Date	Explanation	PR	Debit	Credit	Balance
2017
March 31	Balance				34,257.00
April 30		CR11	35,645.00		69,902.00
30		CD14		45,533.00	24,369.00

A list of deposits made and cheques written during April, taken from the Cash Receipts Journal and Cash Disbursements Journal, is shown below:

Deposits Made
April 7	$14,865.00
13	892.00
18	14,272.00
23	994.00
27	1,981.00
30	2,641.00
Total April Cash Receipts	$35,645.00

Cheques Written
No. 91	$ 1,256
92	5,475
93	2,590
94	3,613
95	3,033
96	1,895
97	8,862
98	3,033
99	8,982
100	6,794
Total April Cash Disbursements	$45,533

The following bank statement is available for April: (Note: The bank deposits interest into the bank account at the end of every month.)

Bank Statement
To: Gemma Tours			April 30, 2017 Bank of Montreal
Cheques/Charges			Deposits/Credits		Balance
					15,500
#93	04/02	2,509	04/03	22,044	35,035
#92	04/07	5,475	04/07	14,865	44,425
#84	04/13	1,981	04/13	892	43,336
NSF	04/18	6,876	04/18	14,272	50,732
#95	04/23	3,033	04/23	994	48,693
#99	04/27	8,982	04/27	1,981	41,692
#96	04/30	1,895	04/30	2,641	42,438
#97	04/30	8,862	INT	46	33,622
#94	04/30	3,613			30,009
PMT	04/30	9,861			20,148
INT	04/30	35			20,113
SC	04/30	55			20,058

NSF = Not Sufficient Funds	SC = Service       Charge	PMT = Principal           Payment	INT = Interest

In reviewing cheques returned by the bank, the bookkeeper discovered that cheque #93, for delivery expense, was recorded in the Cash Disbursements Journal incorrectly as $2,590. The NSF cheque was that of customer Laura Clark, deposited in April.

Required:
a. Prepare a bank reconciliation at April 30.   

	GEMMA TOURS Bank Reconciliation April 30, 2017 Bank Statement Company's Books Bank statement balance Book balance Add: Add: 0 0 0 Deduct: Deduct: Outstanding cheques: 0 0 Adjusted bank balance Adjusted book balance

b. Prepare the necessary journal entries to bring the General Ledger Cash account into agreement with the adjusted balance on the bank reconciliation.

Journal entry worksheet

Record interest earned.

Note: Enter debits before credits.

	Date General Journal Debit Credit Apr 30

Journal entry worksheet

Record to account for error in Cheque #93.

Note: Enter debits before credits.

Date General Journal Debit Credit Apr 30 Journal entry worksheet Record to reinstate customer account. Note: Enter debits before credits. Date General Journal Debit Credit Apr 30 Journal entry worksheet Record April loan payment. Note: Enter debits before credits. Date General Journal Debit Credit Apr 30 Journal entry worksheet Record April interest expense. Note: Enter debits before credits. Date General Journal Debit Credit Apr 30 Journal entry worksheet Record April bank charges. Note: Enter debits before credits. Date General Journal Debit Credit Apr 30

Answer 1

Chq number
#79	1306
#91	1256
#98	3033
#100	6794
Total	12389

1	Bank reconciliation
	Ending balance as per bank statement	20058
Add	Deposit in transit	0
Add	Error by bank (750-570)
		20058
Less	Outstanding checks	12389
	Adjusted bank balance	7669
	Ending balance as per cash account		24369
Add	Interest revenue	46
	Error in chq 93	81	127
Less	NSF	6876
	Service charges	55
	Interest expense	35
	Principal payment	9861	16827
	Adjusted cash balance		7669
	Journal entry
Apr-30	Cash	46
	Interest revenue		46
Apr-30	Cash	81	(2590-2509)
	Delivery expense		81
Apr-30	Accounts receivable - laura	6876
	Cash		6876
Apr-30	Loan	9861
	Cash		9861
Apr-30	Interest expense	35
	Cash		35
Apr-30	Misc expense	55
	Cash		55