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1.Prepare bank reconciliation statement and adjusting entries.Shoe City Pty Ltd’s bank reconciliation clerk is unable to...

1.Prepare bank reconciliation statement and adjusting entries.Shoe City Pty Ltd’s bank reconciliation clerk is unable to reconcile the bank balance at 31 January. The balance of the cash at bank account, before any entries for transactions initiated by the bank, was $4770.20 in the company records. The clerk’s attempt at the bank reconciliation statement is as follows:

Cash balance as per bank statement $4 392.20 Cr
Add: Dishonoured cheque $516.00
Less: Bank charges $30.00
Less: Outstanding deposits $708
Add: Unpresented cheques $876.00
Cash balance as per company records $5046.2

Required
(a) Prepare a correct bank reconciliation.
(b) Journalise the entries required by the reconciliation.


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Answer #1

(a) Correct reconciliation statement

Cash balance as per bank statement 4392.2
+ Dishonoured Cheques 516
+ Bank Charges 30
+ Outstanding deposits 708
- Unpresented cheques -876
Cash Balance as per company records 4770.2

(b) Journal Entries
Particulars Debit in $ Credit in $
1 Accounts receivable 516
    to Cash 516
( Dishonoured cheque adjusting entry, receivable account debited)
2 Bank Charges 30
   to cash 30
( Bank charges debited by bank is recorded)
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