Question

Broadway Enterprises has received its bank statement as at March 31, 2019 which showed a balance...

Broadway Enterprises has received its bank statement as at March 31, 2019 which showed a balance of $15,180. Meanwhile its Cash book balance at March 31, 2019 stood $8,140. In addition, the Accountant of Broadway Enterprises was presented with the following information: 1. Bank charges for the month were shown as $250 as per bank statement. 2. Cheques issued to two creditors-Alloy Limited for $900 (cheque #253) and Ben Lion for $270 (cheque #258) were not presented to the bank and remain outstanding. 3. Ali Brown, a customer deposited a cheque in the amount of $2,500 directly into Broadway Enterprises’ bank account that was not recorded in the cash book. 4. Proceeds of a matured Note receivable was received by the bank in the amount of $5,800, including interest of $800. 5. A cheque in the amount of $180 received from a customer, Barry Duke was returned by the bank marked as Not Sufficient Funds. 6. The bank erroneously posted a cheque in the amount of $2,000 (cheque #1123) issued by Broadway Limited in Broadway Enterprises’ account. 7. During the evening of March 31, a deposit of $2,000 was placed in the night deposit box at the bank after closing hours; this is not shown on the bank statement. You are required to:

(a) Prepare the relevant journal entries; and

(b) Prepare the Bank Reconciliation Statement for Broadway Enterprises as at March 31, 2019.

Homework Answers

Answer #1

Solution a:

Journal Entries - Broadway Enterprises
Date Particulars Debit Credit
31-Mar Cash Dr $2,500.00
       To Account receivables $2,500.00
(To record collection of receivables)
31-Mar Cash Dr $5,800.00
       To Note receivables $5,000.00
       To Interest revenue $800.00
(To record note collection by bank)
31-Mar Miscellenaeous expense Dr $250.00
       To Cash $250.00
(Being service charge debited by bank)
31-Mar Accounts receivables Dr $180.00
       To Cash $180.00
(To record NSF check from customer)

Solution b:

Broadway Enterprises
Bank Reconciliation - March 31
Bank's Cash balance Company's cash balance
Particulars Amount Particulars Amount
Ending balance as per Bank Statements $15,180.00 Ending Balance as per cash books $8,140.00
Additions: Additions:
Outstanding Deposits $2,000.00 Bank collection $2,500.00
Note collection (including interest) $5,800.00
Deductions: Deductions:
Outstanding Checks $1,170.00 Service Charge $250.00
NSF Cheque $180.00
Up to date cash balance as per bank $16,010.00 Up to date cash balance as per books $16,010.00
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