Question

P4A. Bank Reconciliation On July 31, Sullivan Company's Cash in Bank account had a balance of LOS . Flynn the ac- S8,112.62. On that date, the bank statement indicated a balance of $9,098.55. A comparison of re- turned checks and bank advices revealed the following: 1. Deposits in transit July 31 amounted to $3,358.19. 2. Outstanding checks July 31 totaled $1,251.12 3. The bank erroneously charged a $215 check of Solomon Company against the Sullivan bank account. 4. A $15 bank service charge has not yet been recorded by Sullivan Company 5. Sullivan neglected to record $3,000 borrowed from the bank on a ten percent six-month note. The ustomer ceal his part (I), r A's ac- bank statement shows the $3,000 as a deposit. 6. Included with the returned checks is a memo indicating that J. Martin's check for $640 had been returned NSF. Martin, a customer, had sent the check to pay an account of $660 less a $20 discount. Sullivan Company recorded a $107 payment for repairs as $1,070. fictitious Required a. Prepare a bank reconciliation for Sullivan Company at July 31. b. Prepare the journal entry (or entries) necessary to bring the Cash in Bank account into agreement nsidered with the reconciled cash balance on the bank reconciliation

Answer 1

bank Reconcilition Statement
balance as per Bank Statement				9098.55
Add:
Deposits in transit				3358.19
Error in recording the ccheck				215
				12671.74
Less:
Outstanding checks				1251.12
Adjusted balance as per Bank Statement				11420.62
Balance as per books				8112.62
Add:
Loan borrowed not recorded				3000
Error in recording repairs				963
				12075.62
Less: NSF check				640
Service charges not recorded				15
Adjusted balance as per books				11420.62
Journal entries:
S.no.	Accounts title and explanations				Debit $	Credit $
a.	Cash account				3000
	Bank note payable					3000
	(for loan taken not recorded)
b.	Cash account				963
	Repairs expenses					963
	(for repairs pais recorded at higher amount)
c.	Accounts receivable				660
	Cash					640
	Sales discount					20
d.	Misc expenses Account				15
	Cash account					15