Question

As the bookkeeper of Rose Company of Drumheller, you received the bank statement from TD Canada Trust

indicating a balance of $5,820.  The ending book balance wad $6,321.    The following information was available

Deposits in transit were $2,875

Bank service charges were $24

Cheques outstanding:  No. 111, $478,  No. 115, $1,147

TD collected a note for Rose, $1,770 and charged you a $12 collection fee

NSF cheque $525 was on the bank statement

Rose company records cheque No. 107 as $900 for this months rent but the bank withdrew the correct amount on the cheque: $800

The bank made an error by deducting $560 to your account that was not one of your cheques

Required:

Prepare a bank reconcilation AND any necessary journal entries

13 marks

6 marks

Date

Debit

Credit

Marks

Answer 1

Bank Reconciliation Statement

Balance as per bank statement = $5820

Add: Deposits in transit = $2875

Add: Error by bank = $560

Less: Checks outstanding (478+1147) = $1625

Adjusted Balance = $7630

Journal entries

Date	Description	Debit	Credit
	Bank Service Charge	$       24
	Cash		$       24
	(bank service charges)
	Cash	$ 1,758
	Collection Fee	$       12
	Notes Receivable		$ 1,770
	(note collected by bank)
	Accounts Receivables	$     525
	Cash		$     525
	(for NSF check)
	Cash	100
	Expense		100
	(excess amount adjusted)