Question

Problem: The following information is available to reconcile Branch Company's book balance of cash with its bank statement cash balance as of July 31, 2019. A. On July 31, the company's Cash account has a $27,497 debit balance, but its July bank statement shows a $27,233 cash balance. B. Check No. 3031 for $1,482 and Check No: 3040 for $558 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 $382 and Check No. 3069 for $2,281, both written in July, are not among the canceled checks on the July 31 statement C. 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 $1,250. D. The July bank statement shows the bank collected $8,000 cash on a noninterest-bearing note for Branch, deducted a $45 collection expense, and credited the remainder to its account. Branch had not recorded this event before receiving the statement. E. 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. F. The July statement shows a $25 bank service charge. It has not yet been recorded in miscellaneous expenses because no previous notification had been received. G. Branch's July 31 daily cash receipts of $11,514 were placed in the bank's night depository on that date but do not appear on the July 31 bank statement. 1. Prepare the bank reconciliation for this company as of July 31, 2019. 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, 2019.

Answer 1

Bank Statement Balance 27,233 Book Balance 27,497 Add Add Proceeds of note less collection charge (8,000 -45) Deposit of July 31 11,514 38,747 7,955 35,452 805 Deduct Check no 3031 Check no 3065 Check no 3069 Adjusted Bank Balance 1,482 382 2,281 Deduct NSF check including fee Service charge Error (Check 3056) (1,270 - 1,250) Adjusted Bank Balance 25 4,145 20 850 34,602 34,602

Debit Credit Date 7/31 20 General Journal Rent expense Cash (corrected entry error) 20 7/31 7,955 45 Cash Collection expenses Note receivable (record note collection less fees) 8,000 7/31 805 Accounts receivable - E.Shaw Cash (charge account for NSF check plus fee) 805 7/31 Miscellaneous expense Cash (record bank service fee) 25