Question

(20 PTS) PART 5: Bank Reconciliation The following information is available to reconcile Bauer Co.'s book balance of cash with its bank statement cash balance as of December 31, 2018. The December 31 cash balance according to the records is $32,878 and the bank statement cash balance for that date is $46,821. a Check No. 1273 for $4,589 and Check No. 1282 for $400, both written and entered in the accounting records in December, are not among the canceled checks. Two checks, No-1231 for $2,289-and No. 1242 for $410 were outstanding on the most recent November 30 reconciliation. Check No.1231 is tisted with the December canceled checks, but Check No. b. 1242 is not When the December checks are compared with the entries in the accounting records, it is found that Check 1267 had been correctly drawn for $3,456 to pay for office supplies erroneously entered in the accounting records as $3,465 c. but was Two debit memoranda are enclosed with the statement and are unrecorded at the time of the reconciliation. One debit memorandum is for $763 and dealt with an NSF check for $745 received from a customer, Title Industries, in payment of its account. The bank assessed an $18 fee for processing it. The second debit memorandum is a $99 charge for check printing Bauer did not record these transactions before receiving the statement. d. A credit memorandum indicates that the bank collected $19,000 cash on a note receivable for the company, deducted a $20 collection fee, and credited the balance to the company's Cash account. Bauer did not record this transaction before receiving the statement. e. Bauer's December 31 daily cash receipts of $9,583 were placed in the bank's night depository on that date but do not appear on the December 31 bank statement. f. Required 1. Prepare the bank reconciliation for this company as of December 31, 2018 2. Prepare the journal entries necessary to bring the company's book balance of cash into conformity with the reconciled cash balance as of December 31, 2018.

Answer 1

Bauer Company
Bank Reconciliation Statement
December 31, 2018
Balance as per bank statement		$        46,821
Add: Deposit in transit		$          9,583
		$        56,404
Deduct: outstanding checks
Check # 1273	$          4,589
Check # 1282	$              400
Check # 1242	$              410	$          5,399
Adjusted cash balance		$        51,005
Balance as per books of account		$        32,878
Add:
Collection of Note by Bank (19000-20)	$        18,980
Error in check # 1267 (3465-3456)	$                  9	$        18,989
		$        51,867
Deduct:
NSF Check (745+18)	$              763
Bank charges	$                99
		$              862
Adjusted cash balance		$        51,005

Bauer Company
Journal entries
Date	Account title & explanation	Debit	Credit
Dec 31, 2018	Cash	18,980
	Bank Collection Charges	20
	Notes receivable		19,000
	(To Notes receivable collected by bank.)
Dec 31, 2018	Cash	9
	Office Supplies		9
	(To Correct the amount of check # 1267.)
Dec 31, 2018	Account receivable	763
	Cash		763
	(To record non-sufficient funds check.)
Dec 31, 2018	Bank charges	99
	Cash		99
	(To record Bank charges.)