Question

You are preparing Great Foods' financial reports for June 2018, and the 30 June 2018 bank statement has just arrived with the balance of $30,800. Currently Great Foods' Cash account shows a balance of $31,560. Additional information: EFT Discount receipt Bank collection EFT Insurance payment Interest revenue earned Dishonoured cheque Deposit in transit Bank service charge Wrong deduction from the bank $ 1,502 $ 15,601 S 4,520 $213 1,620 14,200 S 370 $620 Outstanding cheques Cheque no. 351 Cheque no. 352 Cheque no. 353 2,510 420 324 Requirements: 1. Suggest one new item that can increase the bank balance, and another new item that can increase the cash balance. The value for both items is the same. 4 marks) 2. With the new bank balances, prepare Great Foods' Bank Reconciliation at 30 June 2018 from the above data. Provide your handwritten solution-scan or use your phone to copy and paste its image into your assignment. You can use a free scanning app such as Camscanner, OfficeLens, or Google Drive. (8 marks) Record any required journal entries from the bank reconciliation. (8 marks)

Answer 1

Requirement-1: New item that can increase bank balance is "Collections deposited in bank but amount recorded by bank short" New item that can increase cash balance is "Matured bonds collected by bank but firm has not yet recorded the same" Requirement-2: Great Foods Bank Reconciliation June 30, 2018 Company's Books Bank Statement Cash balance according to company's records Add: EFT discount receipt Add: Bank collections Add: Interest revenue earned $31,560 $1,502 $15,601 $213 $48,876 Cash balance according to bank statement Add: Deposits in transit, not recorded by bank Add: Wrong deduction from the bank $30,800 $14,200 $620 $45,620 Less: Outstanding Checks Less: EFT Insurance payment Less: Dishonoured cheque Less: Bank Service Charges Adjusted balance $4,520 -$1,620 $370 $42,366 Cheque no.351 Cheque no.352 Cheque no.353 Adjusted balance -$2,510 $420 $324 $42,366

Requirement-3 Event General Journal Debit Credit NOTE a) Cash $1,502 Note receivable $1,502 Adjusting entries in company's books are required to be passed only for those transactions which would affect company records. (To record EFT Discount receipt by bank) b) Cash $15,601 $15,601 Accounts receivable To record bank collections In other words, transactions which would affect bank records shall not be recorded in books. So outstanding checks and deposits in transit are not recorded in adjusting entries. c) Cash $213 Interest revenue $213 (To record interest revenue earned) d Insurance expense Cash $4,520 $4,520 (To record EFT insurance payment) e) Accounts Receivable $1,620 $1,620 Cash To record cheaue dishonoured f Bnk Service Charges $370 $370 Cash To record bank charges debited by bank