Question

The following information is provided for preparing bank reconciliation for Rush Company as of December 31.

1. The cash ledger account of Rush Company reveals an ending balance of $8,374.33 as of December 31.

2. Comparison of the company’s records and the bank statement for December indicates that, the following checks are issued and appear in the company’ records but are not listed among the paid checks by the bank:

Ck.no.423 $125

Ck.no.424 $387

3. Comparison of the company’s records and the bank statement for December indicates that, all the deposits made by Rush Company and recorded in the company’ accounts during December are all listed in the bank statement for December. These deposits are as follows:

Deposit 1 $6,700.38

Deposit 2

Deposit 3 $4,300 $1,400

4. Comparison of the company’s records and the bank statement demonstrates that, the check (Ck.no.422) for $643 is issued by Rush to pay electricity bill for the month of December. The check is accurately recorded in the company’s records and it is accurately paid by the bank. The check appears among the paid checks in the bank statement.

5. The bank statement, demonstrates that the ending balance of cash is $8,000 as of December 31.

6. Comparison of the company’s records and the December bank statement indicates that a check which is not issued by Rush Company is erroneously paid by bank and deducted from Rush’s bank balance, $656.33.

7. The debit memorandum presented in the bank statement reveals payment of telephone bill by the bank on behalf of Rush company, $230.

Requirements (40 points):

a. Prepare bank reconciliation for Rush Company as of December 31.

b. Prepare the adjusting entry/entries in general journal of Rush Company as of December 31.

Answer 1

a.

Bank reconciliation statement for Rush company as of December 31	Amount	Amount
Balance as per Company Books		8374.33
Add:-Cheques issued but not cleared by bank
Chk no 423	125
Chk no 424	387
Total		512
Less:-
Amount erroneously deducted from Rush's bank account	656.33
Telephone Bill paid by bank on behalf of company	230
Total		886.33
Balance as per bank statement		8000

b.

Date	Particulars	Folio no.	Debit	Credit
31 December	Telephone Bill Account Dr.		230
	To Cash ledger Account			230
	(Being payment of Telephone bill paid by bank and pending in cash ledger)