Question

Belbin’s Grocery Store developed the following information in recording its bank statement for the month of March, 2017.

           Balance per books March 31               $ 1,905

           Balance per bank statement March 31 $11,400

1.    Cheques written in March but still outstanding $8,000.

2.    Cheques written in February but still outstanding $2,800.

3.    Deposits of March 30 and 31 not yet recorded by bank $5,200.

4.    NSF cheque of customer returned by bank $700.

5.    Cheque No. 210 for $594 was correctly issued as a payment on account and paid by bank but incorrectly entered in the general journal as payment on account for $549.

6.    Bank service charge for March was $50.

7.    A payment on account was incorrectly entered in the general journal for $824 when Cheque No. 318 was correctly prepared for $284. The cheque cleared the bank in March.

8.    A review of the bank statement revealed Belbin’s Grocery received electronic payments from customers on account of $4,150 during March.

Required:

1. Prepare a bank reconciliation at March 31, 2017.
2. Prepare any adjusting entries necessary as a result of the bank reconciliation.

Answer 1

Bank reconciliation

Balance as per Bank Statement	11400	Balance as per Books	1905
Add: Deposit in transit	5200	Add: Electronic fund transfer	4150
		Add: Error in check (824-284)	540
Less: Outstanding checks	-10800	Less: NSF Check	-700
		Bank Charges	-50
		Less: Error in check (594-549)	-45
Adjusted balance	5800	Adjusted balance	5800

b) Adjusting entry

Date	Account and explanation	Debit	Credit
Mar 31	Account receivable	700
	Cash		700
Mar 31	Account payable (594-549)	45
	Cash		45
Mar 31	Bank service charge	50
	Cash		50
Mar 31	Cash	540
	Account payable		540
Mar 31	Cash	4150
	Account receivable		4150