Question

Award: 1.86 points On August 1, 2019, the accountant for Western Imports downloaded the company's July 31, 2019, bank statement from the bank's website The balance shown on the bank statement was $28,760. The July 31, 2019, balance in the Cash account in the general ledger was $14,042 Jenny Irvine, the accountant for Western Imports, noted the following differences between the bank's records and the company's Cash account in the general ledger. a. An electronic funds transfer for $14,600 from Foncier Ricard, a customer located in France, was received by the bank on July 31. b. Check 1422 was correctly written and recorded for $1,200. The bank mistakenly paid the check for $1,280 c. The accounting records indicate that Check 1425 was issued for $60 to make a purchase of supplies. However, examination of the check online showed that the actual amount of the check was for $90. d. A deposit of $900 made after banking hours on July 31 did not appear on the July 31 bank statement e. The following checks were outstanding: Check 1429 for $1,249, and Check 1430 for $141. f. An automatic debit of $262 on July 31 from CentralComm for telephone service appeared on the bank statement but had not been recorded in the company's accounting records. Required: - 1. Prepare a bank reconciliation for the firm as of July 31. 2. Record general journal entries for the items on the bank reconiliation that must be journalized. Analyze: What effect on total expenses occurred as a result of the general journal entries recorded?

Answer 1

1.Bank Reconciliation Statement    Balance as per Bank Statement (Given)- $28760

Additions:b) Check 1422 was wrongly paid by bank for $1280 but same has been recorded in books

for $1200. Difference (1280-1200) shall be added $80

c) Check 1425 recorded in books for $60 but actual payment was $90, so $30 shall be

added back    $30

d) Payment made after banking hours not reflected in bank statement $900

e) Automatic debit in bank statement but not appearing in records    $262

Deletions: a) Electronic transfer of customer in France(Because it  has not been booked in Books)- ($14600)

e) Outstanding check 1429 for $1249 and check 1430 for $141 ($1390)

Balance as Per Records of Company $14042

2. Journal Entries

a) Bank A/c Dr $14600

To Debtor(Foncier Ricard) $14600

b) Creditor A/c Dr $80

To Bank $80

c) Creditor a/c Dr $30

To Bank $30

d) Cash A/c $900

To Bank $900

e) Bank a/c Dr. $1390

To creditor $1390

f) Telephone services A/c Dr. $ 262

To Bank $262

.3. Effect on total expenses due to Journal Entries are as follows-

Effect is only due to recording of telepoinic charges debited by bank but not entered in records of

company. Due to this expenses of company will increased by $262.