Question

Problem 8-4A Preparing a bank reconciliation and recording adjustments P3 The following information is available to reconcile Branch Company's book balance of cash with its bank statement cash balance as of July 31. a. On July 31, the company's Cash account has a $27,497 debit balance, but its July bank statement shows a $27,233 cash balance. b. Check No. 3031 for $1,482, Check No. 3065 for $382, and Check No. 3069 for $2,281 are outstanding checks as of July 31. c. Check No. 3056 for July rent expense was correctly written and drawn for $1,270 but was erroneously entered in the accounting records as $1,250. d. The July bank statement shows the bank collected $7.955 cash on a note for Branch. Branch had not recorded this event before receiving the statement. e. The bank statement shows an $805 NSF check. The check had been received from a customer, Evan Shaw. Branch has not yet recorded this check as NSF. f. The July statement shows a $25 bank service charge. It has not yet been recorded in miscellaneous expenses because no previous notification had been received. g. Branch's July 31 daily cash receipts of $11,514 were placed in the bank's night depository on that date but do not appear on the July 31 bank statement. Check (1) Reconciled balance, $34.602; (2) Cr. Notes Receivable, $8,000 Required 1. Prepare the bank reconciliation for this company as of July 31. 2. Prepare the journal entries necessary to make the company's book balance of cash equal to the recon- ciled cash balance as of July 31.

I want to make sure I did both of the required questions correctly. Sorry I can't post 2 pictures. Thanks!

Answer 1

Solution 1:

Branch Company
Bank Reconciliation - July 31
Bank's Cash balance		Company's cash balance
Particulars	Amount	Particulars	Amount
Ending balance as per Bank Statements	$27,233.00	Ending Balance as per cash books	$27,497.00
Additions:		Additions:
Outstanding cash receipt	$11,514.00	Note collection by bank (net of collection fee)	$7,955.00
Deductions:		Deductions:
Outstanding Checks (Check no 3031, 3065, 3069) ($1,482 + $382 + $2,281)	$4,145.00	Incorrect recording of check no 3056	$20.00
		NSF Check	$805.00
		Service Charge	$25.00
Up to date cash balance as per bank	$34,602.00	Up to date cash balance as per books	$34,602.00

Solution 2:

Journal Entries
Date	Particulars	Debit	Credit
a	No Journal Entry Required
b	No Journal Entry Required
c	Rent expense Dr	$10.00
	To Cash		$10.00
	(Correction entry for check no 3056)
d	Cash Dr	$7,955.00
	Expenses for collection Dr	$45.00
	To Note receivables		$8,000.00
	(To record note collectioon by bank)
e	Accounts receivables Dr	$805.00
	To Cash		$805.00
	(To record NSF check from customer)
f	Miscellenous Expenses Dr	$14.00
	To Cash		$14.00
	(Being service charges debited by bank)
g	No Journal Entry Required