Question

Bank Reconcilation Review the records of Mayhem Co. for the month of April. Their ending The followe information comes from cash belance per their general ledger was $7,840. Cash Payments 580 870 1,0s0 110 Apr 4 1716 Apr 】 17 25 1718 1719 17 From the Company's Bank Statement 4/2 560 4/5 1716 4/1 4,480 4/2 5,040 580 800 20 Sc 1,440 4/28 1,500 CM 4/11 5,69 780 10 IN 4/12 4,890 4/15 6,390 4/17 7,170 4/28 CM-Credit Memo sc-Service Charge IN-Interest The Credit Memo is for the collection of a note. Check 1717 for utilities was incorrectly recorded in the check register as $870. It cleared the bank for the correct amount. Prepare the Bank Reconcliation as of April 30 and the necessary journal entries.

Answer 1

Bank Reconciliation Procedure: 1On the bank statement, compare the company's list of issued checks and deposits to the checks shown on the statement to identify uncleared checks and deposits in transit 2 Using the cash balance shown on the bank statement, add back any deposits in transit 3 Deduct any outstanding checks 4 This will provide the adiusted bank cash balance 5 Next, use the company's ending cash balance, add any interest earned and notes receivable amount 6 Deduct any bank service fees, penalties, and NSF checks. This will arrive at the adjusted company cash balance 7 After reconciliation, the adjusted bank balance should match with the company's ending adjusted cash balance AmountAdiustment to Books ENDING BANK BALANCE 7160 Deduct: Uncleared cheques Deduct: Uncleared cheques Add: 1050 None 110 None deposit in transit 2900 None Adiusted Bank Balance 8900 ENDING BOOK BALANCE 7340 Deduct: sevice charges Add Add Add Interest income Error on check Notes receivables 20 Debit expense, Credit Cash A/c 10 Debit Cash A/c, Credit interest income 70| Debit Cash A/C , Credit income 1500 Debit Cash A/c, Credit Notes Receivable Adiusted Book Balance 8900

check 1717 for utilities was incorrectly recorded in the check register as $.870, it is cleared in the bank for the correct amount, it means due to this wrongly posting, the book balance decreased by S.70 by excess payment posting,,hence now we have to add back this $.70 for correct book balance ournal Entries Particulars Debit(S) Credit(S) services charges(Bank charges) A/c 20 To Cash A/c 20 Being Service charges deducted by bank cash A/c 10 To Interest Income A/c 10 Being Interest income received from bank Cash A/c 70 To income A/c(error on check Being wrongly posted amount now corrected 70 Cash A/c 1500 To Notes Receivables A/c 1500