Question

Exercise 9.4. Chan Corporation received a bank statement showing a balance of $14,700 as of October 31, 2016. The firm’s records showed a book balance of $14,262 on October 31. The difference between the two balances was caused by the following items Prepare the adjusted bank balance section and the adjusted book balance section of the bank reconciliation statement. Also prepare the necessary journal entry:

1. A debit memorandum for an NSF check from James Dear for $424.
2. Three outstanding checks: Check 7017 for $124, Check 7098 for $55, and Check 7107 for $1,560.
3. A bank service charge of $20.
4. A deposit in transit of $857.

Answer 1

Balance as per Firms Record = $14262

Add- Outstanding Checks (124+55+1560) $1739

Less:- Debit memorandum for NSF check ($424)

Less:- Bank service charge ($20)

Less:- Deposit in transit ($857)

Balance as per Bank statement $14700

Journal Entries:-

i) Bank a/c Dr $1739

To check outstanding Cr $1739

ii) James Dear Dr $424

To Bank Cr $424

iii) Bank charges Dr $ 20

To Bank Cr $20

iv) Deposit in Transit     Dr $ 857

To Bank Cr $857