Question

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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 $24,959 debit balance, but its July bank statement shows a $28,048 cash balance.
2. Check No. 3031 for $1,800, Check No. 3065 for $676, and Check No. 3069 for $2,568 are outstanding checks as of July 31.
3. Check No. 3056 for July rent expense was correctly written and drawn for $1,250 but was erroneously entered in the accounting records as $1,240.
4. The July bank statement shows the bank collected $5,000 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 $8 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 $6,132 were placed in the bank’s night depository on that date but do not appear on the July 31 bank statement.

Answer 1

BRANCH COMPANY
Bank Reconciliation
July 31
Bank statement balance		28048	Book balance		24959
Add:			Add:
Deposit of July 31	6132		Proceeds of note	5000
		6132			5000
		34180			29959
Deduct:			Deduct:
Check No. 3031	1800		NSF check including fee	805
Check No. 3065	676		Service charge	8
Check No. 3069	2568		Error (Check 3056)	10
		5044			823
Adjusted bank balance		29136	Adjusted book balance		29136

Transaction	General Journal	Debit	Credit
a.	No journal entry required
b.	No journal entry required
c.	Rent expense	10
	Cash		10
d.	Cash	5,000
	Notes receivable		5,000
e.	Accounts receivable—E. Shaw	805
	Cash		805
f.	Miscellaneous expenses	8
	Cash		8
g.	No journal entry required