Question

On February 28", TR Company's general ledger shows a checking account balance of $36,900. The company's cash receipts for the month which haven't cleared the bank yet are $12,000 and checks written by the company this month which have not cleared the bank total $24,500. While comparing the bank statement with the general ledger TR determined the bank under- charged them $90 for a check the bank cleared. The bank statement also reported service fees of $10, interest TR earned on their account of $6, and an automatic withdrawal of $400 for the phone bill. The bank statement also showed the bank had collected a $3.000 note receivable for TR. The company noted that one of the checks they wrote was incorrectly recorded in the general ledger, it was written for $1,000 but they had subtracted $1,200 from their checking account. The bank statement reported the company checking account balance was $52,286 on February 28? Answer the following based on performing a bank reconciliation for TR Company. How should the company treat the bank error? (add/sub from bank/general ledger) 2 How should the company treat the company error? (add/sub from bank/ general ledger) What is the general ledger cash balance before reconciliation? $ What is the bank statement balance before reconciliation? $ s What is the general ledger balance after reconciliation? $

Answer 1

Answer: 1. How should the company treat the bank error? 2. How should the company treat the company error? 3. What is the general ledger cash balance before reconciliation? 4. What is the bank statement balance before reconciliation? 5. What is the general ledger balance after reconciliation? Answers Sub from bank Add to general ledger $36,900 $52,286 $39,696 Workings: Cash balance per bank $36,900 TR COMPANY Bank Reconciliation February 28 $52,286 Cash balance per cash book Add: Interest earned in bank account $12,000 Error in recording a pay check $64,286 Note collected by bank directly Add: Deposits in transit $6 $200 $3,000 [$1,200 - $1,000] $3,206 $40,106 Less: Outstanding Checks Erroneous undercharge by bank $24,500 $90 $24,590 Less: Service fee charged by bank Direct phone bill pay by bank Reconciled balance on the bank reconciliation $10 $400 $410 $39,696 Reconciled balance on the bank reconciliation $39,696 NOTE: Adjusting entries in company's books are required to be passed only for those transactions which would affect company records' balance. In other words, transactions which would affect bank records shall not be recorded in company's books of accounts. So, outstanding checks and deposits in transit are not recorded in adjusting entries.