Question

Cowboy Company’s bank statement for June 30 showed a cash balance of $8,652. The company’s general ledger Cash account showed a $6,933 debit balance. The following information was also available as of June 30:

1. A customer’s note for $900 was collected by the bank.
2. A deposit placed in the bank’s night depository on June 30 totaled $3,456. This deposit did not appear on the bank statement.
3. Outstanding checks as of June 30 totaled $4,560.
4. Included with the bank statement was a debit memorandum in the amount of $25 for bank service charges. These charges had not been recorded on the company’s books.
5. Examination of the checks on the bank statement with the entries in the accounting records reveals that check #345 for the payment of an utility expense was correctly written for $780, but as recorded in the accounting records as $870.
6. A debit memo included with the bank statement shows a $350 NSF check from a customer, J. Doe.

Based on the above information, prepare the June bank reconciliation and necessary adjusting journal entries for Cowboy Company.

Answer 1

Bank Reconciliation

Balance as per bank statement	8,652	Balance as per book	6,933
add :		add:
Deposit in transit	3,456	Collection of note	900
		Correction of book error	90
Less :		Less :
Outstanding checks	-4,560	Bank service charge	-25
		NSF check	-350
Adjusted balance	$7,548	Adjusted balance	$7,548

Journal

Event	Account Title and Explanation	Debit	Credit
1	Cash	900
	Note receivable		900
	(To record collection of note by bank)
2	bank service charge	25
	Cash		25
	(To record bank service charge)
3	Cash	90
	Utility expense		90
	(To record book error)
4	Accounts receivable - J. Doe	350
	Cash		350
	(To record NSF check)