Question

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?

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