Question

The Fitzgerald Company maintains a checking account at the Bank of the North. The bank provides a bank statement along with canceled checks on the last day of each month. The October 31, 2016, bank statement included the following information:

Balance, October 1, 2016	$	32,760
Deposits		89,500
Checks processed		(78,700)
Service charges		(420)
NSF checks		(1,670)
Monthly loan payment deducted
directly by bank from account
(includes $470 in interest)		(4,170)
Balance, October 31, 2016	$	37,300

The company’s general ledger cash (checking) account had a balance of $42,677 at the end of October. Deposits outstanding totaled $4,294, and all checks written by the company were processed by the bank except for those totaling $5,690. In addition, a check for $570 for the purchase of office furniture was incorrectly recorded by the company as a $57 disbursement. The bank correctly processed the check during October.

Required:
1.	Prepare a bank reconciliation for the month of October.

          

2.	Prepare the necessary journal entries at the end of October to adjust the general ledger cash account. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Answer 1

1.

The Fitzgerald Company
Bank Reconciliation
As of October 31, 2016
Company's book			Bank balance
Balance as per book		$ 42,677	Balance as per bank		$ 37,300
Add			Add
			Deposit in transit	4294
Deduct					4294
NSF Check	1670		Deductions
Bank service charges	$     420		Outstanding checks	5690
Loan repayment (4,170-470)	$ 3,700				$    5,690
Interest on loan	$     470
Clerical error ($570-$57)	513
		6773
Correct cash balance		$ 35,904	Adjusted bank balance		$ 35,904

2.

Bank service charges	$     420
Accounts receivable	$ 1,670
Loan payable	$ 3,700
Interest on loan	$     470
Office furniture	$     513
Cash		$ 6,773