Question

E7.24 (LO6) (Bank Reconciliation and Adjusting Entries)

Kipling plc deposits all receipts and makes all payments by check.

The following information is available from the cash records.

June 30 Bank Reconciliation Balance per bank ￡7,000

Add: Deposits in transit 1,540

Deduct: Outstanding checks 2,000

Balance per books ￡6,540 Month of July

Results Per Bank Per Books Balance July 31 ￡8,650 ￡9,250

July deposits 4,500 5,810

July checks 4,000 3,100

July note collected (not included in July deposits) 1,500 —

July bank service charge 15 —

July NSF check from a customer,

returned by the bank (recorded by bank as a charge) 335 —

Instructions a. Prepare a bank reconciliation going from balance per bank and balance per book to correct the cash balance.

b. Prepare the general journal entry or entries to correct the Cash account.

Answer 1

ANSWER:

(a).

July 30 Bank Reconciliation
Balance as per bank	8650
Add
Deposit In transit 1540+5810-4500	2850
Less
Outstanding Checks 2000+3100-4000	1100
Adjusted Balance	10400
Balance as per book	9250
Add
Note Collected	1500
Less
Bank Service charge	15
NSf Check	335
Adjusted Balance	10400

(b).

	DR	CR
Cash	1500
Note Collected		1500
Bank Service charge	15
Cash		15
Account Receivable	335
Bank Service charge		335

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