Question

P7-3A On May 31, 2017, Rebe On May 31, 2017, Reber Company had a cash balance per books of $6,781.50. The P k statement from New York State Bank on that date showed a balance of $6,404.60. A a omparison of the statement with the Cash account revealed the following facts. The statement included a debit memo of $40 for the printing of additional company checks. 2. Cash sales of $836.15 on May 12 were deposited in the bank. The cash receipts journal entry and the deposit slip were incorrectly made for $886.15. The bank credited Reber Company for the correct amount. 3. Outstanding checks at May 31 totaled $576.25. Deposits in transit were $2,416.15. 4. On May 18, the company issued check no. 1181 for $685 to Lynda Carsen on account. The check, which cleared the bank in May, was incorrectly journalized and posted by Reber Company for $658. 3. A $3,000 note receivable was collected by the bank for Reber Company on May 31 plus $80 interest. The bank charged a collection fee of $20. No interest has been accrued on the note. 6. Included with the canceled checks was a check issued by Stiner Company to Ted Cress for $800 that was incorrectly charged to Reber Company by the bank. 7. On May 31, the bank statement showed an NSF charge of $680 for a check issued by Sue Allison, a customer, to Reber Company on account. Instructions (a) Prepare the bank reconciliation at May 31, 2017. (b) Prepare the necessary adjusting entries for Reber Company at May 31, 2017. 347

Answer 1

Preparation of Bank Reconciliation Statement: 4 4 4 6,781.50 (40.00) (50.00) 576.25 (2,416.15) (27.00) 4 4 4 Cash Balance as per Company Books Less: Bank Charges for Printing Ckecks Less: Incorrect Entry in Cash Journal ($886.15-$836.15) Add: Outstanding Checks Less: Deposits in Transit Less: Incorrect Entry in Cash Journal ($685-$658) Add: Notes Receivable Directly Collected 3,000.00 Add: Interest on Note $ 80.00 Less: Bank Collection Fee $ (20.00) $ Less: Bank Error Less: NSF Check Adjusted Cash Balance 3,060.00 (800.00) (680.00) 6,404.60 4 Balance as per Bank Statement 6,404.60 Any Differences 4

Journal Entries Date Account Title and Explaination Post. Ref. Debit (S) Credit (S) Bank Charges 40.00 Cash 40.00 (To record Bank Charges) 50.00 Sales Revenue ($886.15-$836.15) Cash (To record Correcting error in Cash journal for cash sales) $ 50.00 3 27.00 Accounts Payable ($685-$658) Cash (To record Correcting entry for Check No.1181) 27.00 3,060.00 20.00 Cash Bank Charges Interest Income Note Receivable (To record Collection of Note along with interest less bank charges) 80.00 3,000.00 Accounts Receivable $ 680.00 Cash 680.00 (To record NSF Check)