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.
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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