Question

The Fitzgerald Company maintains a checking account at the Bank of the North. The bank provides a bank statement along with canceled checks on the last day of each month. The October 31, 2016, bank statement included the following information: Balance, October 1, 2016 $ 32,740 Deposits 88,500 Checks processed (77,700) Service charges (400) NSF checks (1,650) Monthly loan payment deducted directly by bank from account (includes $450 in interest) (3,950) Balance, October 31, 2016 $ 37,540 The company’s general ledger cash (checking) account had a balance of $42,639 at the end of October. Deposits outstanding totaled $4,274, and all checks written by the company were processed by the bank except for those totaling $5,670. In addition, a check for $550 for the purchase of office furniture was incorrectly recorded by the company as a $55 disbursement. The bank correctly processed the check during October.

1Prepare a bank reconciliation for the month of October.

2. Prepare the necessary journal entries at the end of October to adjust the general ledger cash account. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Answer 1

1.

Bank Reconciliation Statement of Fitzgerald Company

As on October 31 , 2016

Particulars	Amount
Cash as per Bank	$ 42,639
Service Charge	$ ( 400)
NSF Checks	$ ( 1,650)
Loan Payment	$ ( 3,950)
Error (Furniture	$ (495)
Cash Balance Adjusted	$ 36,144

Cash as per Bank	$ 37,540
Deposit in Transit	$ 4,274
Outstanding Check	$ ( 5,670)
Cash Balance Adjusted	$ 36,144

2.

Sl.No	Account Title and Explanation	Debit	Credit
1	Service Charge	$ 400
	Accounts Receivable	$ 1,650
	Loan	$ 3,500
	Interest Expense	$ 450
	Office Furniture	$ 495
	Cash		$ 6495