Question

On August 1, 2019, the accountant for Western Imports downloaded the company's July 31, 2019, bank...

On August 1, 2019, the accountant for Western Imports downloaded the company's July 31, 2019, bank statement from the bank's Website. The balance shown on the bank statement was $28,840. The July 31, 2019, balance in the Cash account in the general ledger was $13,424.

Jenny Irvine, the accountant for Western Imports, noted the following differences between the bank's records and the company's Cash account in the general ledger:

  1. An electronic funds transfer for $15,200 from Foncier Ricard, a customer located in France, was received by the bank on July 31.
  2. Check 1422 was correctly written and recorded for $1,200. The bank mistakenly paid the check for $1,270.
  3. The accounting records indicate that Check 1425 was issued for $69 to make a purchase of supplies. However, examination of the check online showed that the actual amount of the check was for $99.
  4. A deposit of $820 made after banking hours on July 31 did not appear on the July 31 bank statement.
  5. The following checks were outstanding: Check 1429 for $1,257, and Check 1430 for $149.
  6. An automatic debit of $270 on July 31 from CentralComm for telephone service appeared on the bank statement but had not been recorded in the company's accounting records.


Required:

  1. Prepare a bank reconciliation for the firm as of July 31.
  2. Record general journal entries for the items on the bank reconiliation that must be journalized.

Analyze:
What effect on total expenses occurred as a result of the general journal entries recorded?

Homework Answers

Answer #1

1.

Bank Reconciliation Statement
At July 31
Balance as Per Bank Statement $28,840
Add: Deposits in transit $820
Add: bank error in recording check (1270-1200) $70
$29,730
Less: Outstanding Checks (1257+149) $1,406
Adjusted Bank Balance $28,324
Balance as per books $13,424
Add: Collection from electronic fund transfer $15,200
$28,624
Less:Telephonecharges $270
Less: incorrect recording of check (99-69) $30
Adjusted Balance per books $28,324

2.

Date Account title Debit Credit
31-Jul Cash 15200
      Accounts Receivable 15200
(To record electronic fund transfer)
31-Jul Telephone expense 270
Suuplies 30
       Cash 300
(To record bank service charges)

3.

effect on total expenses occurred = $270 Increase

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