Question

The bank reconciliation prepared by Gemma Tours on March 31, 2020, appeared as follows:

GEMMA TOURS
Bank Reconciliation
March 31, 2020
Bank statement balance				$	15,700		Book balance	$	34,699
Add:
Deposit of March 31 in transit					22,328
					38,028
Deduct:
Outstanding cheques:
#79	$	1,322
#84		2,007			3,329
Adjusted bank balance				$	34,699		Adjusted book balance	$	34,699

The Cash account in the General Ledger appeared as follows on April 30:

Cash							Acct. No. 101
Date		Explanation	PR	Debit		Credit	Balance
2020
March	31	Balance					34,699.00
April	30		CR11	36,101.00			70,800.00
	30		CD14			46,073.00	24,727.00

A list of deposits made and cheques written during April, taken from the Cash Receipts Journal and Cash Disbursements Journal, is shown below:

Deposits Made
April	7		$	15,055.00
	13			904.00
	18			14,464.00
	23			1,008.00
	27			2,007.00
	30			2,663.00
Total April Cash Receipts			$	36,101.00

Cheques Written
No.	91		$	1,272
	92			5,545
	93			2,590
	94			3,659
	95			3,071
	96			1,919
	97			8,974
	98			3,071
	99			9,094
	100			6,878
Total April Cash Disbursements			$	46,073

The following bank statement is available for April: (Note: The bank deposits interest into the bank account at the end of every month.)

Bank Statement
To: Gemma Tours						April 30, 2020 Bank of Montreal
Cheques/Charges						Deposits/Credits			Balance
									15,700
#93	04/02		2,509			04/03	22,328		35,519
#92	04/07		5,545			04/07	15,055		45,029
#84	04/13		2,007			04/13	904		43,926
NSF	04/18		6,972			04/18	14,464		51,418
#95	04/23		3,071			04/23	1,008		49,355
#99	04/27		9,094			04/27	2,007		42,268
#96	04/30		1,919			04/30	2,663		43,012
#97	04/30		8,974			INT	46		34,084
#94	04/30		3,659						30,425
PMT	04/30		9,987						20,438
INT	04/30		35						20,403
SC	04/30		55						20,348
NSF = Not Sufficient Funds		SC = Service Charge				PMT = Principal Payment			INT = Interest

In reviewing cheques returned by the bank, the bookkeeper discovered that cheque #93, for delivery expense, was recorded in the Cash Disbursements Journal incorrectly as $2,590. The NSF cheque was that of customer Laura Clark, deposited in April.

Required:
a. Prepare a bank reconciliation at April 30.     

b. Prepare the necessary journal entries to bring the General Ledger Cash account into agreement with the adjusted balance on the bank reconciliation.

• 1

  Record interest earned.

• 2

  Record to account for error in Cheque #93.

• 3

  Record to reinstate customer account.

• 4

  Record April loan payment.

• 5

  Record April interest expense.

• 6

  Record April bank charges.

Answer 1