Question

The following information is available to reconcile Branch Company’s book balance of cash with its bank statement cash balance as of July 31, 2017.

  

1. On July 31, the company’s Cash account has a $25,752 debit balance, but its July bank statement shows a $26,965 cash balance.
2. Check No. 3031 for $1,070 and Check No. 3040 for $527 were outstanding on the June 30 bank reconciliation. Check No. 3040 is listed with the July canceled checks, but Check No. 3031 is not. Also, Check No. 3065 for $311 and Check No. 3069 for $1,838, both written in July, are not among the canceled checks on the July 31 statement.
3. In comparing the canceled checks on the bank statement with the entries in the accounting records, it is found that Check No. 3056 for July rent expense was correctly written and drawn for $1,270 but was erroneously entered in the accounting records as $1,260.
4. The July bank statement shows the bank collected $6,000 cash on a noninterest-bearing note for Branch, deducted a $30 collection expense, and credited the remainder to its account. Branch had not recorded this event before receiving the statement.
5. The bank statement shows an $805 charge for a $795 NSF check plus a $10 NSF charge. The check had been received from a customer, Evan Shaw. Branch has not yet recorded this check as NSF.
6. The July statement shows a $9 bank service charge. It has not yet been recorded in miscellaneous expenses because no previous notification had been received.
7. Branch’s July 31 daily cash receipts of $7,152 were placed in the bank’s night depository on that date but do not appear on the July 31 bank statement.
   2. Prepare the journal entries necessary to bring the company's book balance of cash into conformity with the reconciled cash balance as of July 31, 2017. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet 4 1 3 5 6 7 Record the adjusting entry required, if any, related to the July 31 cash balance. Note: Enter debits before credits. Transaction General Journal Debit Credit Record entry Clear entry View general journal
   

Answer 1

Solution Bank Reconciliation July 31, 2017 Bank: Balance, July 31, 2017 Add: $26,965 $7,152 Deposit in transit $34,117 Less: Outstanding checks 3031 $1,070 $311 3065 3069 $1,838 $3,219 Adjusted Bank Balance, July 31, 2017 $30,898 Books Balance, July 31, 2017 $25,752 Add: Collection of Notes less collection charges $5,970 $31,722 check posting NSF Check plus NSF Charges Bank service charges Less $10 error $805 $9 $824 Adjusted Book Balance, July 31, 2017 $30,898 Required 2: Prepare the journal entries necessary to bring the company's book balance of cash into conformity with the reconciled cash balance as of July 31, 2017

General Journal Transaction Debit Credit -No journal entry required a General Journal Transaction Debit Credit No journal entry required b. Transaction General Journal Debit Credit Rent expense $10 Cash $10 (To rectify the check posting error) General Journal Transaction Debit Credit Cash d. $5,970 Notes collection fee $30 Notes Receivable $6,000 (To record collection of notes less collection charges) Transaction General Journal Debit Credit Accounts Receivable* $805 Cash $805 (To record NSF check) Assumed that NSF charge $10 shall be recovered from the customer) Transaction General Journal Debit Credit Miscellaneous expenses f. $9 Cash $9 (To record bank service charge) General Journal Transaction Debit Credit No journal entry required - g.