Question

Identify if the item should be included as a reconciling item in Shamrock's bank reconciliation. Indicate if a journal entry will be needed to correct any of the account for Shamrock. cu º Journal Entry? Journa Type of reconciling item treconciling item Deduct from the cash balance per books " Yes Does not affect the bank reconciliation Yes Y Add to the cash balance per books Deduct from the cash balance per bank 1. A deposit of collections on account from customers was made, but the amount did not match what appeared on the bank statement. The correct amount of $4,630, shown on the bank statement should have been used in Shamrock's books instead of the amount recorded of $4,716. 2. Included on the bank statement is an automatic charge for Shamrock Service's monthly mortgage payment. The amount of the payment was $760 of which $470 is principal. Shamrock's bookkeeper always waits for the transaction to appear on the bank statement before recording it because the amount varies from month to month. 3. When retracing cheque payments to the journals during the bank reconciliation process, it was noticed that a $1,290 cheque, payable to Shamrock Service's landlord for the current month's rent, was charged to Advertising Expense. 4. On the previous month's bank reconciliation, an outstanding cheque for $480 for a final pay cheque of a part-time employee had not yet been cashed. On the current month bank statement, the cheque has still not cleared the bank account. 5. Shamrock has an agreement with RBC to collect notes receivable and any outstanding interest on the notes. Shamrock's bookkeeper waits to record any collection until the amounts are reported by RBC, because it is not predictable how much of the collection will be interest. On the current bank statement, an entry appears for a deposit of $1.109 for a collection of a note with a principal amount of $1,029. 6. Appearing on the bank reconciliation is a charge for an NSF cheque of $700 which had been deposited earlier in the month by Shamrock as a payment on account by a new customer. RBC had added an additional charge of $36 for processing the NSF cheque. Because the customer was new, Shamrock warned the customer that any NSF charges would be added to the amount owing from the customer. 7. A cheque correctly issued in the amount of $490 as a payment on account to a supplier was incorrectly recorded in the books as $590. 8. Two cheques totalling $311, which were outstanding at the end of the last month, cleared in the current month's bank statement. 9. Included in the bank statement are charges of $49 for the use of debit cards by Shamrock's customers. Shamrock waits for the information to be processed by the bank before recording them in the books. Add to the cash balance per bank bank Yes i Yes Deduct from the cash balance per books Yes Deduct from the cash balance per books Yes Add to the cash balance per bank No Deduct from the cash balance per books Yes

Answer 1

Pes Yes Yes S.No. Answers 1) Deduct from the cash balances per books 2) Deduct from the cash balances per books 3) Does not affect the bank reconciliation 4) Deduct from the cash balances per bank 5) Add to the cash balances per books 6) Deduct from the cash balances per books 7) Add to the cash balances per books 8) Does not affect the bank reconciliation 9) Deduct from the cash balances per books Reason Book balance will be overstated for the difference amount and so difference amount shall be deducted from book balance. Book balance will be overstated for the charges not recorded and so it shall be deducted from book balance. It is just an incorrect ledger accounts selection and so it doesn't affect bank reconciliation though rectification entry is required. Entry for this transaction would have been recorded in books already and so no further entry is required during reconciliation. Book balance will be understated for the collections not recorded and so it shall be added to book balance. Book balance will be overstated for the NSF cheque not recorded and so it shall be deducted from book balance. Book balance will be understated for the extra pay amount recorded and so it shall be added to book balance. It is just an information related to item appeared in previous month's bank reconciliation which is cleared in current month. Book balance will be overstated for the charges not recorded and so it shall be deducted from book balance. Yes Yes Yes No Yes

Journal Entries: Debit Credit $86 $86 ($4,716 - $4,630] $470 $290 [$760 - $470] $760 $1,290 $1,290 $0 $0 S.No. Accounts Tiles and Explanation 1) Accounts Receivable Cash 2) Mortgage Payable Interest Expense Cash 3) Rent Expense Advertising Expense 4) No Entry No Entry 5) Cash Note receivable Interest Revenue 6) Accounts Receivable Cash 7) Cash Accounts Payable 8) No Entry No Entry 9) Card Expense Cash $1,109 $1,029 $80 ($1109 - $1029] [$700 + $36] $736 $736 $100 [$590 - $490] $100 $0 SO $49 $49