Question

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

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.

Homework Answers

Answer #1

a. Bank reconciliation statement

Details $$$
Balance as per Bank statement 8000.00
Add:-
Amount erroneously deducted from Rush's bank account 656.33
Telephone Bill paid by bank on behalf of company 230.00
Less:-
Cheque no 423 125.00
Cheque no 424 387.00
Balance as per company cash ledger 8374.33

Payment issued recorded in books but not yet cleared by bank (Cheque.423 and 424 are deducted from bank balance to arrive at balance as per books of company)

b. Adjusting Journal entry on December 31

Date Details Folio no. Debit Credit
31 December Telephone Bill A/c Dr. 230
To Cash ledger A/c Cr. 230
(Telephone bill paid by bank not recorded in books)
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