Question

Problem 8-4A Preparing a bank reconciliation and recording adjustments LO P3 The following information applies to the questions displayed below] The following information is available to reconcile Branch Company's book balance of cash with its bank statement cash balance as of July 31, 2017 a. On July 31, the company's Cash account has a $25,862 debit balance, but its July bank statement shows a $28,128 cash balance. b. Check No. 3031 for $1,490 and Check No. 3040 for $737 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 $521 and Check No. 3069 for $2,258, 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 $1.260 but was erroneously entered in the accounting records as $1,250 d. The July bank statement shows the bank collected $5,500 cash on a noninterest-bearing note for Branch, deducted a $28 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 fot 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 $8 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 $6,652 were placed in the bank's night depository on that date but do not appear on the July 31 bank statement.

Answer 1

BRANCH COMPANY Bank Reconciliation July 31, 2017 Bank statement balance $ 28, 128 Book Balance $25,862 Add: Aold: Proceeds of note Deposit of July 31 & 6,652 less collection $5,472 charge $ 6, 652 & 5,472 $34,780 $31,334 Deduct: Deduct: INSF check Check No. 3031 $1,490 including fee & 805 Check No. 3065 $ 521 service charge & & Check No. 3069 $2,258 Error(check 3056)$ 10 $ 4,269 $ 823 Adjusted I book balance $30,511 , Adjusted bank balance Calculation: Proceeds of note less collection charge = $5,500 - $20 = $5,472 Error (cheek 3056) = $1,260 - $1,250 = $10

Transaction I a. No Debit credit General Journal journal entry required b. No journal entry required & 10 Rent expense Cash (to record error) $10 $ 5,472 cash Collection expense Notes Receivable (To record notes receivable) $5,500 $ 805 Accounts Receivable - E. Shaw Cash (To record charges $805 $ 8 Miscellaneous expenses Cash To record miscellaneous expenses) No journal entry required alculation : Rent expense = an: Rent expense $12 = $1260 $ 1,250 = $10 rd, Cash = $5,500 - $28 = $5.492