Question

National Surf Board Co. (NSB) gathered the following information for its August 31 bank reconciliation:

• Cash balance per books, August 31                  $3,872
• Cash balance per bank, August 31                    $ (332) (account is overdrawn; a negative balance)

• August 31st cash receipts of $8,000 were locked in NSB’s Treasurer’s office with a plan to deposit them at the bank the next day.

• Outstanding cheques issued by NSB at August 31st totalled $4,023

• A check originally issued by a customer for $257 was returned by NSB’s bank.

• The bank statement showed the bank assessed interest charges of $15 on August 31 which have not been recorded by NSB.

• The bank statement showed special charges of $35 which had been properly recorded by NSB.

• NSB’s Check #101 to pay for supplies was incorrectly processed by NSB’s bank as $205; it was correctly entered as $250 in NSB’s books.

1) Prepare the bank reconciliation for August 31.               

2) Prepare any necessary journal entries that NSB has to make to update its accounting records.

Answer 1

Solutions:

1.

Bank Reconciliation
As of August 31
Balance as Per Bank Statement		-$332.00
Add: Deposits in transit		$8,000.00
Less: Outstanding Checks (11846.40+5385.96)		$4,023.00
Less: bank error in processing check (250-205)		$45.00
Adjusted Bank Balance		$3,600.00
Balance as per Accounting records		$3,872.00
Less:
NSF Check returned	$257.00
Bank interest charges	$15.00
		$272.00
Adjusted Cash Balance		$3,600.00

2.

No.	Account title	Debit	Credit
a.	Accounts receivable	$257.00
	Cash		$257.00
b.	Miscellaneous expense	$15.00
	Cash		$15.00