Question

blem 3. Bank Reconciliation and Journal Entries. 30 points (20 points for bank Pro reconciliation; 10 points for related journal entry). Required: Prepare a bank reconciiation as a result of as of S eptember 30. Prepare any necessary adjusting journal entries necessary the bank reconciliation. Brown Company's bank statement for September 30 showed a cash balance of $1,350. The company's Cash account in its general ledger showed a $995 debit balance. The following information was also available as of September 30. a. A $125 debit memoranda is included with the bank statement and dealt with a customer's for $100 marked NSF and returned to Brown Company by the the company's a $25 processing fee. b. The September 30 cash receipts, $1,250, were placed in the bank's night depository after hours on that date and this amount did not appear on the September 30 bank statement c. A $15 debit memorandum for checks printed by the September 30 bank was included with the canceled checks. check bank. In addition, the bank charged banking d. Outstanding checks amounted to $1,145. e. A customer's note for $900 was collected by the bank. A collection fee of $25 was deducted by the bank and the difference was deposited in the account. f. Included with the canceled checks was a check for $275, drawn on another company, Browne Inc Date Account Titles and Explanation P. R Debit Credit

Answer 1

	Bank reconciliation
	Bank balance		1350
Add	Deposit in transit	1250
			1250
Less	Outstanding checks
		1145
			1145
	Adjusted bank balance		1455
	Cash balance		995
Add	interest income		875
Less	Checks printed	15
	Wrong check	275
	NSF cheq	125
			415
	Adjusted cash balance		1455
	Journal entries
	Cash	875
	Service charges	25
	Accounts receivable		900
	Service charges	15
	Accounts payable(browne)	275
	Accounts payable	125
	Cash		415