Question

Accounting 350 - Computer Spreadsheet Assignment #1 (Chapter 7) Brachycephalic Inc. received its September 30, 2018 bank statement. It showed a balance of $10,600. It also showed bank charges of $35, collection of Louis Brandeis’ note for $1,891 and interest of $52, a collection fee of $11, and that Willy Brandt’s check of $506.40 was uncollectible. Brachycephalic Inc.’s ledger showed a cash balance of $5,362.45.

Comparison of the records with the bank statement revealed the following:

A deposit in transit of $1,756.95.

Checks outstanding on September 30 of

4221 $4,021.00

4225 62.15

4226 1,527.15

The bookkeeper had entered as $81 a $180 customer check that was for payment on account.

Check #4198 for $982 which had been issued to pay utilities had been entered as $829.

Check #4212 for $116.40 which had been issued to buy office supplies had been entered as $164.

1.Prepare the September 30, 2018 bank reconciliation.

2.Prepare the required entries on the books of Brachycephalic Inc.

Answer 1

1. Bank reconciliation statement

Particulars	$
Balance as per Cash Book	5362.45
Add:
Checks outstanding- 4221	4021
-4225	62.15
-4226	1527.15
Wrong entry by bookkeeper (180-81)	99
Wrongly entered (164-116.4)	47.6
Collection directly by bank	1891
Interest	52
Less:
Deposit in transit	1756.95
Wronly entered (982-829)	153
Bank charges	35
Notes uncollectible	506.4
Collection fee	11
Balance as per Bank balance	10600

2. Entries to be made in books of account

• Bank charges a/c Dr 35

To bank. 35

• Bank a/c dr. 1891

To notes receivable 1891

• Bank a/c dr. 52

To interest received 52

• Collection charges a/c dr . 11

To bank 11

• Bad debts a/c dr. 506.4

To bank. 506.4

• Rectification a/c dr. 6.4

To bank. 6.4

(153-99-47.6)

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