Question

The books of Smith’s Service, Inc. disclosed a cash balance of $68,757 on June 30. The...

The books of Smith’s Service, Inc. disclosed a cash balance of $68,757 on June 30. The bank statement as of June 30 showed a balance of $54,780. Additional information that might be useful in reconciling the two balances follows:

(a) Check number 748 for $3,000 was originally recorded on the books as $4,500.

(b) A customer's note dated March 25 was discounted on April 12. The note was dishonored on June 29 (maturity date). The bank charged Smith’s account for $14,265, including a protest fee of $42.

(c) The deposit of June 24 was recorded on the books as $2,895, but it was actually a deposit of $2,700.

(d) Outstanding checks totaled $9,885 as of June 30.

(e) There were bank service charges for June of $210 not yet recorded on the books.

(f) Smith’s account had been charged on June 26 for a customer's NSF check for $1,296.

(g) Barry properly deposited $600 on June 3 that was not recorded by the bank.

(h) Receipts of June 30 for $13,425 were recorded by the bank on July 2.

(i) A bank memo stated that a customer's note for $4,500 and interest of $165 had been collected on June 27, and the bank charged a $36 collection fee.

1). Prepare a bank reconciliation statement, using the form that reconciles bank and book balances to the correct cash balance.

2) Write the journal entry to bring the cash balance to its correct amount.

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Answer #1
Balance as per Books 68757
Add:
Check written recorded in error 1500
Notes collected with interest 4665
74922
Less:
Notes discounted including Noting 14265
Wrong deposit entry recorded 195
Service charges not recorded 210
NSF check 1296
Collection charges not recorded 36
Adjusted balance as per Books 58920
Journal entries:
Accounts title and explanations Debit $ Credit $
Cash Account Dr. 1500
      Accounts payable 1500
Cash Account 4665
      Notes receivable 4500
      Interest revenue 165
Misc. expense Dr. 36
            Cash account 36
Accounts receivable Dr 14265
           Cash account 14265
Cash Account Dr. 195
          Cash (Current) account 195
Misc. expense Dr. 210
          Cash account 210
Accounts receivable Account Dr. 1296
           Cash account 1296
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