Question

a company’s cash account was last reconciled on november 30, 20x5. the unadjusted cash balance at december 31, 20x5 was $215,322. a comparison of the bank statement to the cash account revealed the following (note that none of the items below have been recorded on the books): • interest on the bank loan of $4,600 was charged on the bank statement. • bank service charges for the month were $670 • outstanding cheques at december 31, 20x5 were $46,520 • the december 30, 20x5 and december 31, 20x5 deposits of $45,990 and $32,405 were recorded by the bank on january 2, 20x6 • one of the cheques that cleared was recorded for $7,430. the cheque was recorded on the bank statement at $7,043 which was the correct amount. the cheque was for selling expenses. • the bank statement balance at december 31, 20x5 was $178,564. required - prepare the adjusting journal entries and a bank reconciliation as at december 31, 20x5.

Answer 1

Answer

Bank Reconciliation Statement
Unadjusted cash balance at december 31, 20x5	$       215,322.00
Add:
cheque was for selling expenses overrecorded	$             387.00
outstanding cheques at december 31, 20x5 were $46,520	$        46,520.00
Less:
interest on the bank loan	$          4,600.00
december 30, 20x5 deposits	$      45,990.00
december 31, 20x5 deposits	$      32,405.00
bank service charges for the month	$             670.00
Adjusted cash balance at december 31, 20x5	$       178,564.00
bank statement balance at december 31, 20x5	$       178,564.00

JOURNAL ENTRY
Particulars	Debit	Credit
Interest on loan	4600
To Bank A/c		4600
(Being interest on the bank loan recordd)
Bank Charges	670
To Bank A/c		670
(Being bank service charges for the month recorded)
Bank A/c	46520
To Cheque Issued		46520
(Being outstanding cheques at december 31, 20x5 were $46,520)
Cash pending for Deposit	$ 45,990.00
To Bank A/c		$ 45,990.00
Cash pending for Deposit	$ 32,405.00
To Bank A/c		$ 32,405.00
(Being Dec deposits of $45,990 and $32,405 were recorded by the bank on Jan)
Bank A/c	387
To selling Exp		387
(Being cheque was for selling expenses overrecorded)