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Chapter 6: 4PSA_1 (page 310)

The following information is available to reconcile Branch Company’s book balance of cash with its bank statement cash balance as of July 31, 2017.

a. On July 31, the company’s Cash account has a \(27,497 debit balance, but its July bank statement shows a \)27,233 cash balance.

b. Check No. 3031 for \(1,482 and Check No. 3040 for \)558 were outstanding on the June 30 bank reconciliation. Check No. 3040 is listed with the July canceled checks, but Check No. 3031 is not. Also, Check No. 3065 for \(382 and Check No. 3069 for \)2,281, both written in July, are not among the canceled checks on the July 31 statement.

c. In comparing the canceled checks on the bank statement with the entries in the accounting records, it is found that Check No. 3056 for July rent expense was correctly written and drawn for \(1,270 but was erroneously entered in the accounting records as \)1,250.

d. The July bank statement shows the bank collected \(8,000 cash on a noninterest-bearing note for Branch, deducted a \)45 collection expense, and credited the remainder to its account. Branch had not recorded this event before receiving the statement.

e. The bank statement shows an \(805 charge for a \)795 NSF check plus a \(10 NSF charge. 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 \)25 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 $11,514 were placed in the bank’s night depository on that date but do not appear on the July 31 bank statement.

Required

1. Prepare the bank reconciliation for this company as of July 31, 2017.

Short Answer

Expert verified

Answer

The Adjusted Bank statement balance and book balance are $34,602.

Step by step solution

01

Step-by-Step SolutionStep 1: Introduction to topic

Bank Reconciliation Statement- Bank Reconciliation Statement is a record book of the financial exchanges of a bank account. This statement helps the account holders check and monitor their funds and update their transaction records.

02

Bank reconciliation statement

Branch Company

Bank Reconciliation Statement

Bank statement balance

$27,233


Book balance

$27,497

Add:



Add:


Deposit of July 31

$11,514

38,747


Proceeds of note less

collection charge


$7,955





35,148

Deduct:



Deduct:


Checks No. 3031 $1,482



NSF check $805


3065 $382



Service charge $25


306 $2,281

$4145


Error (Check 3056) $20

850

Adjusted bank balance

$34,602


Adjusted book balance

$34,602






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Most popular questions from this chapter

Nakashima Gallery had the following petty cash transactions in February of the current year.

Feb. 2 Wrote a \(400 check, cashed it, and gave the proceeds and the petty cashbox to Chloe Addison, the petty cashier.

5 Purchased paper for the copier for \)14.15 that is immediately used.

9 Paid \(32.50 COD shipping charges on merchandise purchased for resale, terms FOB shipping point. Nakashima uses the perpetual system to account for merchandise inventory.

12 Paid \)7.95 postage to deliver a contract to a client.

14 Reimbursed Adina Sharon, the manager, \(68 for mileage on her car.

20 Purchased stationery for \)67.77 that is immediately used.

23 Paid a courier \(20 to deliver merchandise sold to a customer, terms FOB destination.

25 Paid \)13.10 COD shipping charges on merchandise purchased for resale, terms FOB shipping point.

27 Paid \(54 for postage expenses.

28 The fund had \)120.42 remaining in the petty cashbox. Sorted the petty cash receipts by accounts affected and exchanged them for a check to reimburse the fund for expenditures.

28 The petty cash fund amount is increased by \(100 to a total of \)500.

Required

2. Prepare a petty cash payment report for February with these categories: delivery expense, mileage expense, postage expense, merchandise inventory (for transportation-in), and office supplies expense. Sort the payments into the appropriate categories and total the expenditures in each category.

Del Gato Clinic deposits all cash receipts on the day when they are received and it makes all cash payments by check. At the close of business on June 30, 2017, its Cash account shows an \(11,589 debit balance. Del Gato Clinic’s June 30 bank statement shows \)10,555 on deposit in the bank. Prepare a bank reconciliation for Del Gato Clinic using the following information:

a. Outstanding checks as of June 30 total \(1,829.

b. The June 30 bank statement lists a \)16 bank service charge.

c. Check No. 919, listed with the cancelled checks, was correctly drawn for \(467 in payment of a utility

bill on June 15. Del Gato Clinic mistakenly recorded it with a debit to Utilities Expense and a credit to Cash in the amount of \)476.

d. The June 30 cash receipts of $2,856 were placed in the bank’s night depository after banking hours and were not recorded on the June 30 bank statement.

Shamara Systems most recently reconciled its bank balance on April 30 and reported two checks outstanding at that time, No. 1771 for \(781 and No. 1780 for \)1,425.90. The following information is available for its May 31, 2017, reconciliation

From the May 31 Bank Statement PREVIOUS BALANCE TOTAL CHECKS AND DEBITS TOTAL DEPOSITS AND CREDITS CURRENT BALANCE CHECKS AND DEBITS DEPOSITS AND CREDITS 18,290.70 Date 05/01 1771 05/04 No. Amount Date Amount 13,094.80 16,566.80 21,762.70 05/02 1783 05/14 05/04 1782 05/22 1784 05/18 05/26 05/11 05/25 05/25 1787 05/26 1785 05/29 1788 05/31 2,438.00 2,898.00 1,801.80 2,079.00 7,350.00 CM 781.00 382.50 1,285.50 431.80 NSF 8,032.50 63.90 654.00 14.00 SC

From Shamara Systems’s Accounting Records Cash Receipts Deposited Cash Date Debit May 4 2,438.00 14 2,898.00 22 1,801.80 26 2,079.00 31 2,727.30 11,944.10 Cash Disbursements Check Cash No. Credit 1782 1,285.50 1783 382.50 1784 1,449.60 1785 63.90 1786 353.10 1787 8,032.50 1788 644.00 1789 639.50 12,850.60 Cash Acct. No. 101 Date Explanation PR Debit Credit Balance Apr. 30 Balance 16,083.80 May 31 Total receipts R7 11,944.10 28,027.90 31 Total disbursements D8 12,850.60 15,177.30

Additional Information

Check No. 1788 is correctly drawn for \(654 to pay for May utilities; however, the recordkeeper misread the amount and entered it in the accounting records with a debit to Utilities Expense and a credit to Cash for \)644. The bank paid and deducted the correct amount. The NSF check shown in the statement was originally received from a customer, W. Sox, in payment of her account. The company has not yet recorded its return. The credit memorandum (CM) is from a \(7,400 note that the bank collected for the company. The bank deducted a \)50 collection expense and deposited the remainder in the company’s account. The collection and expense have not yet been recorded.

Required

1. Prepare the May 31, 2017, bank reconciliation for Shamara Systems.

Prepare a table with the following headings for a monthly bank reconciliation dated September 30.

Bank Balance Book Balance Not Shown on the Reconciliation

Add Deduct Add Deduct Adjust

For each item 1 through 12, place an x in the appropriate column to indicate whether the item should be added to or deducted from the book or bank balance, or whether it should not appear on the reconciliation. If the book balance is to be adjusted, place a Dr. or Cr. in the Adjust column to indicate whether the Cash balance should be debited or credited. At the left side of your table, number the items to correspond to the following list.

1. NSF check from customer is returned on September 25 but not yet recorded by this company.

2. Interest earned on the September cash balance in the bank.

3. Deposit made on September 5 and processed by the bank on September 6.

4. Checks written by another depositor but charged against this company’s account.

5. Bank service charge for September.

6. Checks outstanding on August 31 that cleared the bank in September.

7. Check written against the company’s account and cleared by the bank; erroneously not recorded by the company’s recordkeeper.

8. Principal and interest on a note receivable to this company is collected by the bank but not yet recorded by the company.

9. Checks written and mailed to payees on October 2.

10. Checks written by the company and mailed to payees on September 30.

11. Night deposit made on September 30 after the bank closed.

12. Special bank charge for collection of notes in part 8 on this company’s behalf.

Chavez Company most recently reconciled its bank statement and book balances of cash on August 31 and it reported two checks outstanding, No. 5888 for \(1,028.05 and No. 5893 for \)494.25. The following information is available for its September 30, 2017, reconciliation.

From the September 30 Bank Statement 16,800.45 9,620.05 11,272.85 18,453.25 PREVIOUS BALANCE TOTAL CHECKS AND DEBITS TOTAL DEPOSITS AND CREDITS CURRENT BALANCE Date 09/03 09/04 09/07 09/20 09/17 09/22 09/22 09/28 09/29 CHECKS AND DEBITS DEPOSITS AND CREDITS 5888 1,028.05 09/05 1,103.75 No. Amount Date Amount 5902 719.90 09/12 2,226.90 5901 1,824.25 09/21 4,093.00 5905 937.00 09/30 12.50 IN 09/25 2,351.70 5903 399.10 09/30 1,485.00 CM 5904 5907 5909 2,090.00 213.85 1,807.65

From Chavez Company’s Accounting Records Cash Acct. No. 101 Date Explanation PR Debit Credit Balance Aug. 31 Balance 15,278.15 Sep. 30 Total receipts R12 11,458.10 26,736.25 30 Total disbursements D23 9,332.05 17,404.20 Cash Receipts Deposited Cash Date Debit Sep. 5 1,103.75 12 2,226.90 21 4,093.00 25 2,351.70 30 1,682.75 11,458.10 Cash Disbursements Check Cash No. Credit 5901 1,824.25 5902 719.90 5903 399.10 5904 2,060.00 5905 937.00 5906 982.30 5907 213.85 5908 388.00 5909 1,807.65 9,332.05

Additional Information

Check No. 5904 is correctly drawn for \(2,090 to pay for computer equipment; however, the recordkeeper misread the amount and entered it in the accounting records with a debit to Computer Equipment and a credit to Cash of \)2,060. The NSF check shown in the statement was originally received from a customer, S. Nilson, in payment of her account. Its return has not yet been recorded by the company. The credit memorandum (CM) is from the collection of a \(1,500 note for Chavez Company by the bank. The bank deducted a \)15 collection expense. The collection and fee are not yet recorded.

Required

Analysis Component

3. The bank statement reveals that some of the prenumbered checks in the sequence are missing. Describe three situations that could explain this.
See all solutions

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