Question

On July 31, 2020, Crane Company had a cash balance per books of $6,190.00. The statement from Dakota State Bank on that date showed a balance of $7,700.00. A comparison of the bank statement with the Cash account revealed the following facts.

1.		The bank service charge for July was $25.
2.		The bank collected $1,500 for Keeds Company through electronic funds transfer.
3.		The July 31 receipts of $1,200.00 were not included in the bank deposits for July. These receipts were deposited by the company in a night deposit vault on July 31.
4.		Company check No. 2480 issued to L. Taylor, a creditor, for $361 that cleared the bank in July was incorrectly entered as a cash payment on July 10 for $316.
5.		Checks outstanding on July 31 totaled $1,860.00.
6.		On July 31, the bank statement showed an NSF charge of $580 for a check received by the company from W. Krueger, a customer, on account.

a. Prepare the bank reconciliation as of July 31. (List items that increase cash balance first. Round answers to 2 decimal places, e.g., 1,245.25)

b. Prepare the necessary adjusting entries at July 31.

Answer 1

Crane Company Bank Reconciliation July 31,2020 Balance as per Bank statement Add: Deposit in transit 7,700 1,200 8,900 1,860 7,040 Less: Outstanding Checks Adjusted Cash Balance $ Balance as per Books Add: EFT collection 6,190 1,500 7,690 580 Less: NSF Charge Error in recording check 2480 (361 - 316) Service charge Adjusted Cash Balance 25 650 7,040 $

Entries Date General Journal Debit Credit July 31 1,500 Cash Accounts receivable (to record the EFT collection) 1,500 July 31 580 Accounts receivable Cash (to record NSF check) 580 July 31 Accounts payable Cash (to rectify the error made in recording check 2480) July 31 Miscellaneous expense Cash (to record service charge)