Question

Required information

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The following information is available to reconcile Branch Company’s book balance of cash with its bank statement cash balance as of July 31.

  

1. On July 31, the company’s Cash account has a $25,418 debit balance, but its July bank statement shows a $26,578 cash balance.
2. Check No. 3031 for $1,030, Check No. 3065 for $291, and Check No. 3069 for $1,798 are outstanding checks as of July 31.
3. Check No. 3056 for July rent expense was correctly written and drawn for $1,210 but was erroneously entered in the accounting records as $1,200.
4. The July bank statement shows the bank collected $8,000 cash on a note for Branch. Branch had not recorded this event before receiving the statement.
5. 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.
6. The July statement shows a $12 bank service charge. It has not yet been recorded in miscellaneous expenses because no previous notification had been received.
7. Branch’s July 31 daily cash receipts of $9,132 were placed in the bank’s night depository on that date but do not appear on the July 31 bank statement.

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 reconciled cash balance as of July 31. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

• Record the adjusting entry required, if any, related to the July 31 cash balance.
• Record the adjusting entry required, if any, related to the outstanding checks.
• Record the adjusting entry required, if any, related to Check No. 3056.
• Record the adjusting entry required, if any, for the collection of the note by bank for Branch.
• Record the adjusting entry required, if any, related to the NSF check.
• Record the adjusting entry required, if any, related to bank service charges.
• Record the adjusting entry required, if any, related to the July 31 deposit.

Answer 1

1
BRANCH COMPANY
Bank Reconciliation
July 31
Bank statement balance		26578	Book balance		25418
Add:			Add:
Deposit of July 31	9132		Proceeds of note	8000
		9132			8000
		35710			33418
Deduct:			Deduct:
Check No. 3031	1030		NSF check including fee	805
Check No. 3065	291		Service charge	12
Check No. 3069	1798		Error (Check 3056)	10
		3119			827
Adjusted bank balance		32591	Adjusted book balance		32591

2
Transaction	General Journal	Debit	Credit
a.	No journal entry required
b.	No journal entry required
c.	Rent expense	10
	Cash		10
d.	Cash	8,000
	Notes receivable		8,000
e.	Accounts receivable—E. Shaw	805
	Cash		805
f.	Miscellaneous expenses	12
	Cash		12
g.	No journal entry required