Question

Seattle Coffee Limited's bank statement for the month of November 2018 showed a balance per bank of $7,000. The company's general ledger Cash account showed a balance of $5,659 at November 30. Other information is as follows:

1.    Cash receipts for November 30 recorded on the company's books were $5,200, but this amount does not appear on the bank statement.

2.    The bank statement shows a debit memorandum for $40 for cheque printing charges.

3.    Cheque #119 payable in the amount of $248 to Holt Corporation was recorded in the general journal and cleared the bank for $248. A review of the accounts payable records shows a $36 credit balance in Holt’s account and that the total payment should have been for $284.

4.    The total amount of cheques outstanding at November 30 was $5,800.

5.    Cheque #138 was correctly written and paid by the bank for $409. The cash payment journal reflects an entry for Cheque #138 as a debit to Accounts Payable and a credit to Cash for $490.

6.    The bank returned an NSF cheque from a customer for $560.

7.    The bank statement included a deposit for $1,260, which represents the electronic collection of customer accounts which have not yet been recorded on the company’s books.

Instructions

(a)   Prepare a bank reconciliation for Seattle Coffee Limited at November 30, 2018.

(b) Prepare any journal entries necessary as a result of the bank reconciliation.

Answer 1

a)

Seattle Coffee Limited
Bank Reconciliation
November 30, 2014
Balance as per bank	$    7,000.00
Add: Deposit in transit	$    5,200.00
Deduct: Outstanding checks	$ (5,800.00)
Adjusted bank balance	$    6,400.00
Balance as per books	$    5,659.00
Less: Error in entry ($490-$409)	$          81.00
Less: NSF Check	$      (560.00)
Less: Bank charges	$        (40.00)
Add: Electronic collection	$    1,260.00
Asjusted book balance	$    6,400.00

b)

Accounts receivable	$ 560
Bank charges	$    40
Cash	$ 741
Accounts receivable		$ 1,260
Accounts payable		$        81