Question

Required information

Problem 6-4A Preparing a bank reconciliation and recording adjustments LO P3

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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 $25,642 debit balance, but its July bank statement shows a $26,942 cash balance.
2. Check No. 3031 for $1,110 and Check No. 3040 for $547 were outstanding on the June 30 bank reconciliation. Check No. 3040 is listed with the July canceled checks, but Check No. 3031 is not. Also, Check No. 3065 for $331 and Check No. 3069 for $1,878, both written in July, are not among the canceled checks on the July 31 statement.
3. In comparing the canceled checks on the bank statement with the entries in the accounting records, it is found that Check No. 3056 for July rent expense was correctly written and drawn for $1,260 but was erroneously entered in the accounting records as $1,250.
4. The July bank statement shows the bank collected $8,000 cash on a noninterest-bearing note for Branch, deducted a $40 collection expense, and credited the remainder to its account. Branch had not recorded this event before receiving the statement.
5. The bank statement shows an $805 charge for a $795 NSF check plus a $10 NSF charge. 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 $9,152 were placed in the bank’s night depository on that date but do not appear on the July 31 bank statement.

Problem 6-4A Part 1

Required:

1. Prepare the bank reconciliation for this company as of July 31.

Answer 1

Bank Reconciliation

Bank	Books
Balance, July 31	26,942	Balance, July 31	25,642
Add:		Add:
Deposit in transit	9,152	Bank collection of receivables	7,960
	36,094		33,602
Less:		Less:
Outstanding checks		NSF check	- 805
Check No. 3031	- 1,110	Bank service charges	- 12
Check No. 3065	- 331	Correction of book error	- 10
Check No. 3069	- 1,878
Adjusted bank balance	$32,775	Adjusted book balance	$32,775