Question

Using the following information, prepare a bank reconciliation for Young Co. for August 31, 2019, and prepare the journal entries: (a) The bank statement balance is $4,095 (b) The cash account balance is $4,205. (c) Outstanding checks amounted to $517. (d) Deposits in transit are $655. (e) The bank service charge is $45. (f) A check for $84 for supplies was recorded as $48 in the ledger. (g) NSF check for $649.00 (h) EFT collected $715.00 (i) Bank error processed a check for $53 as $35

Answer 1

While making Bank Reconciliation Statement, there is shortage in adjusted Cash Balance of $25 (that is Adjusted Cash Balance = $4070 and Balance as per Bank Statement is $4095 hence the difference is $25 this is may be interest from Bank.

Preparation of Bank Reconciliation Statement: Balance as per Cash Account Add: Outstanding Checks Less: Deposits in Transit Less: Bank Service Charges Less: Check Errorly Recorded ($84-$48) $ 4,205.00 517.00 (655.00) (45.00) (36.00) (649.00) 715.00 Less: NSF Check Add: EFT Collection Add: Bank Error ($53-$35) 18.00 $ Add: Interest From Bank 25.00 Adjusted Cash Balance 4,095.00 Balance as Per Bank Statement 4,095.00 Difference if Any $ A

Journal Entries Post Date Account Title and Explaination Debit Credit Ref. S Bank Charges 1 45.00 45.00 Cash (To record Bank Service Charges) Accounts Payable (S84-$48) 36.00 Cash $ 36.00 (To record Correcting entry for error check for $84 recorded as $48) Accounts Receivables 3 649.00 Cash 649.00 (To record NSF Check) Cash $ 4 715.00 Accounts Receivable 715.00 (To record EFT Collections assuming that it is collection of receivables) Cash $ 5 25.00 Interest Income 25.00 (To record interest from Bank) GA