Question

Seaside Boat Company's bank statement for the month of September showed a balance per bank

of $7,000. The company's Cash account in the general ledger had a balance of $4,667 at

September 30. Other information is as follows:

(1) Cash receipts for September 30 recorded on the company's books were $4,200 but this

amount does not appear on the bank statement.

(2) The bank statement shows a debit memorandum for $40 for check printing charges.

(3) The total amount of checks still outstanding at September 30 amounted to $5,800.

(4) Check No. 138 was correctly written and paid by the bank for $429. The cash payment

journal reflects an entry for Check No. 138 as a debit to Accounts Payable and a credit to

Cash in Bank for $492.

(5) The bank returned an NSF check from a customer for $550.

(6) The bank included a credit memorandum for $1,260 which represents collection of a

customer's note by the bank for the company; principal amount of the note was $1,200 and

interest was $60. Interest has not been accrued.

Instructions

(a)

Prepare a bank reconciliation for Seaside Boat Company at September 30.

(b)

Prepare any adjusting entries necessary as a result of the bank reconciliation.

Answer 1

(a)	Seaside Boat Company
	Bank Reconciliation
	September 30
	Ending Cash Balance per Books		$4,667
	Additions:
	Collection of Note including interest	$1,260
	Company's Error	$63	$1,323
			$5,990
	Deductions:
	NSF Check	$550
	Service Charges	$40	$590
	Correct cash balance		$5,400
	Ending Cash Balance per Bank		$7,000
	Additions:
	Deposits in transit		$4,200
			$11,200
	Deductions:
	Outstanding checks		$5,800
	Correct cash balance		$5,400
(b)
Date	Account Titles and Explanation	Debit	Credit
Sep 30	Accounts Receivable	$550
	Cash		$550
	(To record NSF Check)
Sep 30	Miscellaneous Expense	$40
	Cash		$40
	(To record Miscellaneous Expense)
Sep 30	Cash	$1,260
	Interest Revenue		$60
	Notes Receivable		$1,200
	(To record Collection of Note including interest)