Question

McDermott Company's bank statement for September 30 showed an ending cash balance of $1,364. The company's Cash account in its general ledger showed a $1,010 debit balance. 

The following information was also available as of September 30. 

• The bank deducted $130 for an NSF check from a customer deposited on September 15. 

• The September 30 cash receipts, $1,260, were placed in the bank's night depository after banking hours on that date and this amount did not appear on the September 30 bank statement. 

• A $16 debit memorandum for checks printed by the bank was included with the canceled checks. 

• Outstanding checks amounted to $1,160. 

• Included with the bank statement was a credit memo in the amount of $880 for an EFT in payment of a customer's account. 

• Included with the canceled checks was a check for $280, drawn on the account of another company. 

Required: 

a. Prepare a bank reconciliation as of September 30. 

b. Prepare the journal entries for the items on the company's bank reconciliation as of September 30.

Answer 1

Solution 1:

McDermott Company
Bank Reconciliation - At September 30
Updates to bank Statemnet			Updates to Company's Books
Ending balance as per Bank Statements		$1,364	Ending Balance as per cash books		$1,010
Additions:			Additions:
Outstanding cash receipt	$1,260		EFT collection	$880
Bank error in recording another company's check	$280	$1,540			$880
Subtotal		$2,904	Subtotal		$1,890
Deductions:			Deductions:
Outstanding Checks	$1,160		NSF Cheque	$130
		$1,160	Charges for Checks printing	$16	$146
Up to date cash balance as per bank		$1,744	Up to date cash balance as per books		$1,744

Solution 2:

Journal Entries
S. No.	Particulars	Debit	Credit
1	Cash Dr	$880
	To Accounts Receivable		$880
2	Accounts Receivable Dr	$130
	To Cash		$130
3	Miscellaneous Expenses Dr	$16
	To Cash		$16
	(Being bank charges for checks printing)