Question

Accounting Principles I (ACC 111) Bank Reconciliation (Chapter 7) Homework Problems Problem 7 - A Bank Reconciliation At September 30, of the current year, the Indigo Company's balance of Cash is $850. The bank's records, on the same date, show a balance of $1,000. The following information is available to reconcile these two balances: a). Indigo made a deposit, on September 30, for $40 that does not appear on the bank statement. b) The following checks, written by Indigo, have not been cashed by September 30: $ 87 #30 #33 c) Bank service charges for the month were $13. d) A check written for $63, to Mahogany Company, was incorrectly recorded by Indigo as $36. The check was payment for supplies on account. e) The bank collected a $90 note receivable from one of Indigo's customers. The principal amount of the note was $60 with an additional $30 included for interest. f) A check written, and recorded, by Indigo for $75 was incorrectly charged by the bank as $57. Requirements: 1) Prepare a bank reconciliation, at September 30 of the current year, in good form. 2) Prepare the necessary journal entries at September 30 of the current year,

Answer 1

Bank Reconciliation Summary
As of Sep 30, 2020
.
Balance per GL account	$850.00		Balance per bank statement	$1,000.00
Additions:			Additions:
Note collected by bank	$90.00		Deposit in transit	$40.00
Total Additions	$90.00		Total Additions	$40.00
Deductions:			Deduction:
Bank charges	$13.00		Outstanding cheques not cashed in bank
Error in Payment to Mohogany Co.	$27.00		#30	$87.00
			#33	$10.00
			#34	$25.00
			Error in cheque recorded by bank	$18.00
Total Deductions	$40.00		Total Deductions	$140.00
Adjusted GL Balance	$900.00		Adjusted Bank Balance	$900.00
Journal Entries
Bank Account		Dr	$90.00
Notes Receivable		Cr		$60.00
Interest income		Cr		$30.00
(Note collected by bank)
Bank Charges		Dr	$13.00
Bank Account		Cr		$13.00
(Bank charges debited by the bank)
Accounts Payable (Mohogany Co.)		Dr	$27.00
Bank Account		Cr		$27.00
(Error in recording the cheque $63 was recorded as $36)