Question

Revise your worksheet to reflect the following transactions and updated values at the end of the accounting period, then answer the questions that follow. 7,200 1,400 9,900 1,100 1 Cash on hand at the company and not yet deposited at the bank. 2 EFT for monthly utility bill not yet recorded by the company. 3 Note collected by the bank and not yet recorded by the company. 4 Interest collected by the bank from note in #3 not yet recorded by the company. 5 A check witten for insurance expense for $110 was cashed. The check was recorded on the books for $190. 6 Checks written by the company but not yet processed by the bank. 7 Service fee charged by bank but not yet recorded by the company. 8 Customer checks determined by the bank to have nonsufficient funds. 3,100 100 2,700 Bank balance at the end of the period. Company balance at the end of the period. 19,610 16,830 Required: 1-a. What is the revised Cash balance at the end of the period? Cash $ 23,710

Answer 1

Solution:

1. Preparation of Revised Cash Book

Particulars	Debit ($)	Particulars	Credit ($)
Unadjusted Balance Note Collected Interest on Note Collected Excess of Insurance Expense	16,830 9,900 1,100 80	EFT of Utility Bill Service Fee Charged NSF Checks Dishonored Revised Balance	1,400 100 2,700 23,710
	27,910		27,910

1. Revised Cash balance at the end of the period    = $23,710
2. Is the Bank reconciliation in balance = No, as the revised balance is still not matched with the bank balance (i.e. $23,710 is not equal to $19,610)

2-a) If the entry to correct the insurance payment hasn’t been made, the balance of cash book = $23,710 – $80 = $23,630

2-b)    would the bank reconciliation still be in balance = No, (as $23,630 is not equal to $19,610)

3. If company incorrectly recording a customer deposit at $190,000 rather than $19,000, this increases the balance of cash   book by $171,000. Hence, the company subtracted the difference of $171,000 from the book balance (i.e. Option 2 is Correct)