Question

Problem 6-4A Preparing a bank reconciliation and recording adjustments LO P3 The following information applies to the questions displayed below.) The following information is available to reconcile Branch Company's book balance of cash with its bank statement cash balance as of July 31. a. On July 31, the company's Cash account has a $25,722 debit balance, but its July bank statement shows a $27,510 cash balance. b. Check No. 3031 for $1,280, Check No. 3065 for $416, and Check No. 3069 for $2,048 are outstanding checks as of July 31. c. Check No. 3056 for July rent expense was correctly written and drawn for $1.270 but was erroneously entered in the accounting records as $1,260. d. The July bank statement shows the bank collected $6,000 cash on a note for Branch. Branch had not recorded this event before receiving the statement. e. The bank statement shows an $805 NSF check. The check had been received from a customer, Evan Shaw. Branch has not yet recorded this check as NSF. f. The July statement shows a $9 bank service charge. It has not yet been recorded in miscellaneous expenses because no previous notification had been received g. Branch's July 31 daily cash receipts of $7,132 were placed in the bank's night depository on that date but do not appear on the July 31 bank statement.

Answer 1

Branch Company
Bank Reconciliation
Jul-31
Book Balance		25,722		Bank Statement Balance		27,510
Add: Outstanding Checks ($ 1280 + 416 + 2048)		3,744		Add: NSF check received in bank		805
Add: Cash collected by bank on a note for branch		6,000		Add: Bank Service charges		9
Deduct: NSF check received in bank		-805		Add: Difference in rent		10
Deduct: Bank Service charges		-9		Add: Branch's July 31 daily cash receipts not appearing in July 31 bank statement		7,132
Deduct: Difference in rent		-10		Deduct: Outstanding Checks ($ 1280 + 416 + 2048)		-3,744
Deduct: Branch's July 31 daily cash receipts not appearing in July 31 bank statement		-7,132		Deduct: Cash collected by bank on a note for branch		-6,000
Adjusted Book Balance ($)		27,510		Adjusted bank Balance ($)		25,722
Journal Entries
Particulars	Debit	Credit
Cash Account	3744
To Supplier / Accounts Payable		3744
(Being Checks outstanding , Check No. 3031 for $ 1280 , Check No 3065 for $ 416 and check no. 3069 for $ 2048)
Cash Account	6000
To Accounts Receivables		6000
(Being Cash received by bank on a note for branch)
Accounts Receivables	805
To Cash		805
( Being NSF check received from a customer)
Miscellaneous Expenses	9
To Cash		9
( Being bank service charges paid)
Rent	10
To Cash		10
( Being July rent recorded as $ 1260 instead of $ 1270)
Accounts Receivables	7132
To Cash		7132
(Being July 31 Cash receipts placed in bank's night depository on that date but do not appear on July 31 bank statement)