Question

(Bank Reconciliation and Adjusting Entries) Presented below is information related to Haselhof Inc. Balance per books at October 31, \(41,847.85; receipts \)173,523.91; disbursements \(164,893.54. Balance per bank statement November 30, \)56,274.20.

The following checks were outstanding at November 30.

1224	\(1,635.29
1230	2,468.30
1232	2,125.15
1233	482.17

Included with the November bank statement and not recorded by the company were a bank debit memo for \)27.40 covering bank charges for the month, a debit memo for \(372.13 for a customer’s check returned and marked NSF, and a credit memo for \)1,400 representing bond interest collected by the bank in the name of Haselhof Inc. Cash on hand at November 30 recorded and awaiting deposit amounted to $1,915.40.

Instructions

(a) Prepare a bank reconciliation (to the correct balance) at November 30, for Haselhof Inc. from the information above.

(b) Prepare any journal entries required to adjust the cash account at November 30.

Short answer

The correct cash balance of the business entity is$51,478.69.

Step-by-step solution

Definition of Outstanding Checks

The checks written by a business entity or individual, but are not presented in the bank by the holder or not cleared by the bank, are covered under outstanding checks.

Bank reconciliation statement

Particular	Amount $	Amount $
Balance as per passbook		$56,274.20
Add:
Deposit in transit		1,915.40
Less:
Checks outstanding
1224	$1,635.29
1230	2,468.30
1232	2,125.15
1233	482.17	(6,710.91)
Correct balance of passbook		$51,478.69
Balance as per cashbook$\left(\$41,847·85+\$173,523·91-\$164,893·54\right)$		$50,478.22
Add:
Interest on bonds		1,400
Less:
Bank charges		(27.40)
NSF checks		(372.13)
Correct cash balance		$51,478.69

Journal entries

Date	Accounts and Explanation	Debit $	Credit $
30 Nov	Cash	$1,400
	Interest on bonds		$1,400
30 Nov	Bank charges	$27.40
	Accounts receivables - NSF checks	$372.13
	Cash		$399.53