Question

As part of your role as the controller for Lynbrook Security, Inc., you are asked to prepare a monthly bank reconciliation. The information you need to prepare the September 30, 2020 bank reconciliation for Lynbrook is listed below: 1. The ledger account for Cash showed a balance at September 30 of $7,820. 2. The September bank statement showed a closing balance of $6,710. 3. The cash received on September 30 amounted to $7,605. It was left at the bank in the night depository chute after banking hours on September 30 and therefore was not recorded by the bank on the September statement. 4. Also included with the September bank statement was a debit memo from the bank for $30 representing service charges for September 5. A credit memo enclosed with the September bank statement indicated that a non-interest-bearing note receivable for $6,000 from Scan House Properties, left with the bank for collection, had been collected and the proceeds credited to the account of Lynbrook, Inc. 6. Comparison of the paid checks returned by the bank with the entries in the accounting records revealed that check no. 2750 for $580, issued September 10 in payment for rent expense, had been erroneously entered in Lynbrook's records as $850. 7. Examination of the paid checks also revealed that three checks, all issued in September, had not yet been paid by the bank: no. 2810 for $225; no. 2760 for $750, no. 2690 for $680. 8. Included with the September bank statement was a $1,400 check drawn by Sam Thompson, a customer of Lynbrook, Inc. This check was marked "NSF." It had been included in the deposit of September 21 but had been charged back against the company's account on September 30. Instructions a. Prepare a bank reconciliation for Lynbrook, Inc., at September 30, 2020. b. Prepare journal entries (in general journal form) to adjust the accounts at September 30. Assume that the accounts have not been closed. C. State the amount of cash that should be included in the balance sheet at September 30.

Answer 1

a)

	Bank Reconciliation Statement of Lynbrook, INC
	as on 30th September 2020
	Particulars	Amount in "$"	Amount in "$"
	Opening Bank Balance		6710
Less:	Outsatanding Cheques (Cheque No. 2810-$225, 2760-$150 & 2690-$680)	1655
	Total		1655
Add:	Depsited cash but not recorrded in Bank Statement	7605
	Total		7605
	Adjusted Bank Balance		12660
	Ending Book Balance		7820
Less:	Bank Service Charges for Septmeber	30
	Dishonoured NSF Cheque from Sam Thompsan	1400
	Total		1430
Add:	Deposit collected by bank from Scan House Properties	6000
	Rent Expenses of $580 Erroneously written $850	270
	Total		6270
	Adjusted Book Balance		12660

b)

Jourmal Entries
Sr. No.	Particulars	Debit '$'	Credit '$'
1	Bank Service Charges Account…….Debit	30
	To Cash Account		30
	(Being Bank service charges made for Septmber)
2	Customer Account………………Debit	1400
	To Bank Account		1400
	(Being Dishonoured NSF Cheque from Sam Thompsan )
3	Bank Account………….Debit	6000
	To Customer Account		6000
	(Being Deposit collected by bank from Scan House Properties)
4	Bank Account………….Debit	270
	To Rent Expenses		270
	(Being Rent Expenses of $580 Erroneously written $850)

c)

Cash Statement		Amount in "$"	Amount in "$"
Outflow	Bank Service Charges for Septmeber	30
	Dishonoured NSF Cheque from Sam Thompsan	1400
	Total		1430
Inflow	Deposit collected by bank from Scan House Properties	6000
	Rent Expenses of $580 Erroneously written $850	270
	Total		6270
Cash need to include in Balance sheet as on 30th Septmeber			4840