Question

Bank Reconciliation On July 31, Arthur Company's Cash in Bank account had a balance of $8,112.62. On that date, the bank statement indicated a balance of $10,170.62 A comparison of returned checks and bank advices revealed the following: 1. Deposits in transit July 31 amounted to $3,316.12. 2. Outstanding checks July 31 totaled $1,251.12. 3. The bank erroneously charged a $215.00 check of Solomon Company against the Arthur bank account. 4. A $15 bank service charge has not yet been recorded by Arthur Company. 5. Arthur neglected to record $4,000.00 borrowed from the bank on a ten percent six-month note. The bank statement shows the $4,000.00 as a deposit. 6. Included with the returned checks is a memo indicating that ), Martin's check for $610.00 had been returned NSF. Martin, a customer, had sent the check to pay an account of $660.00 less a $50 discount. 7. Arthur Company recorded a $107.00 payment for repairs as $1,070.00 Required a. Prepare a bank reconciliation for Arthur Company at July 31. b. Prepare the journal entry (or entries) necessary to bring the Cash in Bank account into agreement with the reconciled cash balance on the bank reconciliation. Note: Do not round answers - enter using two decimal places, when needed. ARTHUR COMPANY Bank Reconciliation July 31 Balance from general ledger Add: Add: Add: Bank error-Solomon Company check Check charged against Arthur Company's account record $ Less Less: Less: NSF Check

Answer 1

Solution:

Bank reconciliation:

	Per books	Per banks
Balance	8,112.62	10,170.62
Deposits in transits		3316.12
Outstanding cheques		-1,251.12
Erroneous harge		215.00
Bank service charge	-15.00
Unbooked deposit	4,000.00
NSF Check	-610.00
Erroneous record	963.00
	12,451	12,451

Particulars	Debit	Credit
Cash in Bank	4,000
Notes Payable		4,000
Cash in Bank	963
Repairs Expense		963
Miscellaneous Expense	15
Cash in Bank		15
Accounts Receivable	660
Sales Discounts		50
Cash in Bank		610