Question

On July 31, 2017, Sheridan Company had a cash balance per books of $6,325.00. The statement from Dakota State Bank on that date showed a balance of $7,875.80. A comparison of the bank statement with the Cash account revealed the following facts. 1. The bank service charge for July was $16.00. 2. The bank collected $1,705.00 for Sheridan Company through electronic funds transfer. 3. The July 31 receipts of $1,387.30 were not included in the bank deposits for July. These receipts were deposited by the company in a night deposit vault on July 31. 4. Company check No. 2480 issued to L. Taylor, a creditor, for $354.00 that cleared the bank in July was incorrectly entered in the cash payments journal on July 10 for $345.00. 5. Checks outstanding on July 31 totaled $2,018.10. 6. On July 31, the bank statement showed an NSF charge of $760.00 for a check received by the company from W. Krueger, a customer, on account.

Answer 1

SHERIDAN COMPANY Bank Reconciliation For the Month of July 31, 2017 Cash balance per bank statement Add: Deposits in transit $ $ $ $ $ 7,875.80 1,387.30 9,263.10 2,018.10 7,245.00 Less: Checks outstanding Adjusted Bank Balance, July 31, 2017 Cash balance per books Add: EFT collected by the bank $ $ $ 6,325.00 1,705.00 8,030.00 Less: Service charges Error in recording a check ($ 354 - $ 345) NSF checks $ $ $ 16.00 9.00 760.00 $ $ 785.00 7,245.00 Adjusted Cash Balance, July 31, 2017

Credit $ Debit 1,705 $ 1,705 2. Journal Entries Account Title and Explanation Cash Accounts Receivable/Note Receivable (To record electronic fund transfer received by bank) - It is not mentioned from whom funds are received. Hence, the account to be credited can either be Accounts receivable or Note Receivable or any other account 760 Accounts Receivable Cash (To record NSF check) $ 760 9 Accounts Payable Cash (To record error in recording check) 16 Miscellaneous Expense Cash (To record bank service charge) $ 16