Question

Sheridan Company of Emporia, Kansas, spreads herbicides and applies liquid fertilizer for local farmers. On May 31, 2019, the company's Cash account per its general ledger showed a balance of $6,818.90. The bank statement from Emporia State Bank on that date showed the following balance. EMPORIA STATE BANK Checks and Debits Deposits and Credits XXX Daily Balance 5-317,048.00 XXX A comparison of the details on the bank statement with the details in the Cash account revealed the following facts. 1. The statement included a debit memo of $56.00 for the printing of additional company checks. 2. Cash sales of $899.15 on May 12 were deposited in the bank. The cash receipts entry and the deposit slip were incorrectly made for $949.15. The bank credited Sheridan Company for the correct amount. 3. Outstanding checks at May 31 totaled $285.25, and deposits in transit were $1,896.15. 4. On May 18, the company issued check No. 1181 for $684.00 to H. Moses, on account. The check, which cleared the bank in May, was incorrectly journalized and posted by Sheridan Company for $648.00. 5. A $2,786.00 note receivable was collected by the bank for Sheridan Company on May 31 through electronic funds transfer. 6. Included with the canceled checks was a check issued by Tomins Company to C. Pernod for $344.00 that was incorrectly charged to Sheridan Company by the bank. 7. On May 31, the bank statement showed an NSF charge of $460.00 for a check issued by Sara Ballard, a customer, to Sheridan Company on account.

Answer 1

Solution:

Sheridan Company
Bank Reconciliation Statement
May-31
Balance as Per Bank Statement		$7,048.00
Add:
Deposits in transit	$1,896.15
Bank error in charging another company's check	$344.00
		$2,240.15
		$9,288.15
Less: Outstanding Checks		$285.25
Adjusted Bank Balance		$9,002.90
Balance as per books		$6,818.90
Add: Collection Note		$2,786.00
		$9,604.90
Less:
Bank Service charges for printing checks	$56.00
Error in recording cash sales (949.15- 899.15)	$50.00
Error in recording payment on account (684- 648)	$36.00
NSF Check	$460.00
		$602.00
Adjusted Balance per books		$9,002.90

Journal Entries
S.No	Particulars	Debit	Credit
31-May	Cash Dr	$2,786.00
	To Note Receivable		$2,786.00
	(To record collection of note receivable by bank)
31-May	Accounts Receivable Dr	$460.00
	To Cash		$460.00
	(To record NSF Check)
31-May	Sales Revenue Dr	$50.00
	To Cash		$50.00
	(To record error in deposit)
31-May	Accounts Payable Dr	$36.00
	To Cash		$36.00
	(To correct error in recording check)
31-May	Miscellaneous Expenses Dr	$56.00
	To Cash		$56.00
	(To records charge for printing checks)