Question

Problem 7-7A The bank portion of last month's bank reconciliation for Crane Ltd. at February 28 was as follows: CRANE LTD. Bank Reconciliation February 28 Cash balance per bank Add: Deposits in transit $18,022 3,126 21,148 Less: Outstanding cheques #3451 #3470 Reconciled cash balance $1,948 2,151 4,099 $17,049 The reconciled cash balance per bank agreed with the reconciled cash balance per books after the bank reconciliation at February 28. The March bank statement showed the following: Amounts Added to Account (Credits) CRANE LTD. Bank Statement March 31 Amounts Deducted from Date Description Account (Debits) Feb. 28 Opening balance Mar. 1 Cheque, No. 3451 1,948 1 Deposit 2 Cheque, No. 3470 2,151 4 Deposit 9 Cheque, No. 3471 1,667 10 Returned cheque-NSF, J. Mustafa 869 10 NSF fee 35 15 EFT, loan payment 1,223 19 Cheque, No. 3472 1,823 3,126 1,965 Balance 18,022 16,074 19,200 17,049 19,014 17,347 16,478 16,443 15,220 13,397 Activate Windov Go to Settings to activ
1) What is the amount of the outstanding cheques at March 31?

2) Prepare the bank reconciliation at March 31. (List items that increase balance as per bank & books first.)

3) Prepare any journal entries required from the reconciliation.

Answer 1

Solution Required 1: Outstanding Cheques at March 31 Cheques no. Date of Cheques issued Payment Amount date per Bank Statement Outstanding at March 31 # 3451 # 3470 #3471 # 3472 # 3473 February $1,948) March 1 February $2,151 March 2 Mar. 7 $1,667 March 9 Mar. 15 $1,283 March 19 Mar. 29 $4,971 Outstanding Total Outstanding Cheques at March 31 $4,971 Required 2: Bank Reconciliation at March 31 CRANE LIMITED Bank Reconciliation March 31 Cash balance per bank Add: |- Deposits in transit (Deposit of March 31) - Error in processing Cheque # 3472 ($1,823 - $1,283) $17,156 $4,028 $540 $4,568 $21,724 Less: Outstanding Cheques (Cheque # 3473) $4,971 Adjusted Bank Balance $16,753 Cash balance per book ($17,049 + $9,233 - $7,921) $18,361 Add: EFT collection $608 $18,969 Less: - NSF cheque including NSF fee ($869 +$35) - EFT loan payment - Bank service charges and credit card fee $904 $1,223 $89 $2,216 $16,753 Adjusted Book Balance

Required 3: Journal Entry Credit Transaction March 31 Debit $608 I General Journal Cash Accounts Receivable (To record EFT collection from customer) $608 Credit Transaction March 31 Debit $904 General Journal Accounts Receivable Cash (To record NSF cheque and NSF fee) * $904 * Assumed that NSF fee of $35 shall be recovered from the customer. Transaction March 31 General Journal Credit Debit $1,140 $83 Loan (/ Notes Payable) Interest Expense Cash (To record loan payment) $1,223 Debit Credit Transaction March 31 $89 General Journal Bank Service charges Cash (To record service charges and credit card fee) $89