Question

At 30th September 2017, the balance in the cash account of woodsworth Co. was $9,300.00. The bank statement for the same date shows a balance of $10,500.00.

On investigation of the difference between the two sums, it was established that:

A.) Cheques in the amount of $700.00 had not yet cleared the bank.

B.) A deposite in the amount of $450.00 was made late on the 30th September and was not shown on the bank statement.

C.) A cheque from Mrs. Jones to the amount of $190.00 was returned to the bank due to insufficent funds.

D.) A customer's note was collected by the bank on the company's behalf to the amount of $1,250.00 less $50.00 service fee to the bank.

E.) The bank charged $60.00 for processing fees.

Task:

1. Prepare a bank reconcilliation statement in good form as of September 30th 2017.

2. Journalize the necessary entries to bring the cash amount up-to-date.

Answer 1

1

Woodsworth Co
Bank Reconciliation
As of September 30, 2017
Checkbook Balance			Bank balance
Balance as per bank		$ 10,500	Balance as per book		$    9,300
Add			Add
Deposit in transit		450	Note collected by bank		$    1,250
Deduct			Deductions
Outstanding checks		700	NSF Check	$ 190
			Bank service charges ($60+$50)	$ 110
					$        300
Adjusted bank balance		$ 10,250	Adjusted cash balance		$ 10,250

2)

Journal entries

Cash	$ 1,200
Bank charges	$        50
Note receivable		$ 1,250
Accounts receivable	$     190
Cash		$     190
Bank charges	$        60
Cash		$        60