Question

Odum Corporation’s cash account showed a balance of $17,100 on March 31, 2016. The bank statement balance for the same date indicated a balance of $17,821.55. The following additional information is available concerning Odum’s cash balance on March 31:

•	Undeposited cash on hand on March 31 amounted to $724.50.
•	A customer’s NSF check for $175.80 was returned with the bank statement.
•	A note for $2,000 plus interest of $25 was collected for Odum by the bank during March. The bank notified Odum of this collection on the bank statement.
•	The bank service charge for March was $15.
•	A deposit of $950.75 mailed to the bank on March 31 did not appear on the bank statement.

The following checks mailed to creditors had not been processed by the bank on March 31:

Check #	Amount
429	$57.40
432	147.50
433	210.80
434	191.90

A customer check for $149.50 in payment of his account and listed correctly for that amount on the bank statement had been incorrectly recorded on the accounting records as $194.50.

	Required:
1.	Prepare a bank reconciliation for Odum on March 31, 2016.
2.	Prepare any adjusting journal entries necessary from the bank reconciliation on March 31.

Answer 1

1.

Odum Corporation
Bank Reconciliation
Mar-31
Bank statement balance		17,821.55	Book balance		17,100
Add:			Add:
Undeposited cash	724.50		Note collected by bank	2000
Deposit in transit	950.75		Interest received	25
		1675.25			2,025
Less:			Less:
Outstanding check:			Bank service charges	-15
429	-57.4		NSF Check	-175.80
432	-147.5		Correction of book error	-45
433	-210.8				-235.80
434	-191.9
		-607.60
Adjusted bank balance		$18,889.20	Adjusted book balance		$18,889.20

2.

Date	General journal	Debit	Credit
March 31	Cash	$2,025
	Note receivable		$2,000
	Interest revenue		$25
	( To record note and interest collected by bank)
March 31	Accounts receivable	$175.80
	Cash		$175.80
	( To record NSF check)
March 31	Accounts receivable	$45
	Cash		$45
	( To record book error)
March 31	Bank service charge	$15
	Cash		$15
	( To record bank service charges)