Question

Part 1 As the controller of Lynbrook, Inc. you are responsible for preparing the monthly bank reconciliation. Using the information below, prepare the bank reconciliation for January 31, 2020. 1. The ledger account for Cash showed a balance at January 31 of $127,500. 2. The January bank statement showed a closing balance of $108.750. 3. The cash received on January 31 amounted to $28,000. It was left at the bank in the night depository chute after banking hours on January 31 and therefore was not recorded by the bank on the January statement. 4. Also included with the January bank statement was a debit memorandum from the bank for $75 representing service charges for January. 5. A credit memorandum enclosed with the January bank statement indicated that a non-interest- bearing note receivable for $5,000 from Jeff Burkett, left with the bank for collection, had been collected and the proceeds credited to the account of Lynbrook, Inc. Comparison of the paid checks returned by the bank with the entries in the accounting records revealed that check no. 1601 for $519, issued January 15 in payment for office equipment, had been erroneously entered in Lynbrook's records as $915. 7. Examination of the paid checks also revealed that three checks, all issued in January, had not yet been paid by the bank: no. 1611 for $2,000; no. 1625 for $1,250; no. 1630 for $779. 8. Included with the January bank statement was a $100 check drawn by Pat Thomas, a customer of Lynbrook, Inc. This check was marked "NSF." It had been included in the deposit of January 27 but had been charged back against the company's account on January 31. Required: a. Prepare a bank reconciliation for Lynbrook, Inc., at January 31, 2020. b. Prepare journal entries (in general journal form) to adjust the accounts at January 31, 2020. C. State the amount of cash that should be included in the balance sheet at January 31, 2020.

Answer 1

a.

Lynbrook Inc. Bank Reconciliation Statement January 31, 2020
Cash balance per bank		$ 108,750	Cash balance per books		$ 127,500
Add: Deposit in transit			Add:
Deposit in Transit	$28,000		Note collected by bank	$5,000
		28,000	Error in recording check # 1601	396	5,396
		136,750			132,896
Less:			Less:
Checks outstanding	4,029		Bank service charges	75
			NSF check	100
					(175)
Adjusted balance per bank		$132,721	Adjusted balance per books		$132,721

b.

Date	Account Titles	Debit	Credit
		$	$
Jan 31, 2020	Bank Charge Expense	75
	Cash		75
	To record bank service charges
Jan 31, 2020	Cash	5,000
	Notes Receivable		5,000
	To record note collected by bank
Jan 31, 2020	Cash	396
	Office Equipment		396
	To rectify error in recording payment for office equipment
Jan 31, 2020	Accounts Receivable	100
	Cash		100
	To record NSF check from customer.

c. Cash that should have been included in the balance sheet at January 31, 2020 : $ 132,721.