Question

On May 31, 2022, Ivanhoe Company had a cash balance per books of $6,748.20. The bank statement from New York State Bank on that date showed a balance of $6,497.30. A comparison of the statement with the Cash account revealed the following facts.

1.		The statement included a debit memo of $53.00 for the printing of additional company checks.
2.		Cash sales of $836.15 on May 12 were deposited in the bank. The cash receipts journal entry and the deposit slip were incorrectly made for $886.15. The bank credited Ivanhoe Company for the correct amount.
3.		Outstanding checks at May 31 totaled $593.50. Deposits in transit were $3,600.40.
4.		On May 18, the company issued check No. 1181 for $684 to Lynda Carsen on account. The check, which cleared the bank in May, was incorrectly journalized and posted by Ivanhoe Company for $648.
5.		A $4,500 note receivable was collected by the bank for Ivanhoe Company on May 31 plus $75 interest. The bank charged a collection fee of $40. No interest has been previously recorded on the note.
6.		Included with the canceled checks was a check issued by Stiner Company to Ted Cress for $840.00 that was incorrectly charged to Ivanhoe Company by the bank.
7.		On May 31, the bank statement showed an NSF charge of $800.00 for a check issued by Sue Allison, a customer, to Ivanhoe Company on account.

A) Prepare the bank reconciliation at May 31, 2022. (List items that increase cash balance first. Round answers to 2 decimal places, e.g. 2,245.25.)

B) Prepare the necessary entries for Ivanhoe Company at May 31, 2022.

Answer 1

The bank reconciliation statement as at 31st May 2022 and journal entries thereafter is as under:-