Question

AP6-2B (Preparation of bank reconciliation) Catalina Holdings Ltd. (CHL), a Calgary-based property management company, is owned by Leslie Smeal. Leslie received the monthly statement for the company, which showed a balance of S26,936.89 at October 31, 2020. She is trying to prepare a bank reconciliation for CHL's bank account. The balance in the Cash account in the company's accounting system at that date was $21,260.16. Leslie reviewed the bank statement and the company's accounting records and noted the following 1. After comparing the cheques written by the company and those deducted from the bank account in October, Leslie determined that all six cheques (totalling $6,180) that had been outstanding at the end of September were processed by the bank in October. However, two of the cheques that had been written in October and mailed by CHL had not been cashed. These were cheques #5109 for $10,505.10 and #5 1 1 2 for $5,303.07 2. A review of the deposits showed that a deposit made by the company on September 30 for $11,532 was recorded by the bank on October 1, and a deposit of $12,314.10 that was made through the night deposit slot late on the evening of October 31 was recorded in the company's accounting system but had not yet been recorded by the bank 3. The October bank statement also showed the following Service fees of S92 were deducted Interest of S19.99 was deposited . A cheque for S1,125.58 that had been part of CHL's deposit on October 23 was not honoured by the bank because the client ·Cheque #5101, which was for a utility payment, was incorrectly recorded by CHL's bookkeeper as $960 when the actual A customer had transferred $3,110.25 to CHL's account electronically to settle the balance they owed CHL. had insufficient funds cheque was for $690 (which was the correct amount owing by CHL)

Answer 1

a.

Catalina Holdings Ltd. Bank Reconciliation October 31, 2020
	$	$
Balance as per Accounting Records		21,260.16
Add:Interest paid by bank	19.99
Add:Correction of check error	270
Add: Direct deposit into bank	3,110.25	3,400.24
		24,660.40
Less: Bank service charges	92
Less: NSF check	1,125.58	(1,217.58)
Adjusted cash balance		23,442.82
Balance as per Bank		26,936.89
Add: Deposits in transit		12,314.10
		39,250.99
Less: Outstanding checks		(15,808.17)
Adjusted Bank Balance		23,442.82

b. $ 23,442.82

c. In the books of CHL:

Adjustment	Account Titles	Debit	Credit
		$	$
October 31	Cash	19.99
	Interest Revenue		19.99
	To record interest paid by bank
October 31	Cash	270
	Utilities Expense		270
	To rectify error in recording heck
October 31	Cash	3,110.25
	Accounts Receivable		3,110.25
	To record direct collection by bank
October 31	Accounts Receivable	1,125.58
	Cash		1,125.58
	To record dishonor of NSF check
October 31	Bank Charges Expense	92
	Cash		92
	To record bank service charges