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College Accounting (Book Only): A ...

13th Edition
Scott + 1 other
ISBN: 9781337280570

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BuyFindarrow_forward

College Accounting (Book Only): A ...

13th Edition
Scott + 1 other
ISBN: 9781337280570
Textbook Problem

On August 31, Baginski and Company receives its bank statement (shown on the next page). The company deposits its receipts in the bank and makes all payments by check. The debit memo for $95 is for an NSF check written by L. Pitts. Check no. 925 for $47, payable to Jardin Company (a creditor), was recorded in the checkbook and journal as $74.

The ledger balance of cash as of August 31, is $1,563. Outstanding checks as of August 31 are no. 928, $150 and no. 929, $292. The accountant notes that the deposit of August 31 for $599 did not appear on the bank statement.

Required

  1. 1. Prepare a bank reconciliation as of August 31, assuming that the debit memos have not been recorded.
  2. 2. Record the necessary journal entries.
  3. 3. Complete the bank form to determine the adjusted balance of cash.

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Check Figure

Adjusted ledger balance of cash, $1,480

1.

To determine

Prepare the bank reconciliation for Company B, as on August 31, 20--.

Explanation

Bank reconciliation: Bank statement is prepared by bank. The company maintains its own records from its perspective. This is why the cash balance per bank and cash balance per books seldom agree. Bank reconciliation is the statement prepared by company to remove the differences and disagreement between cash balance per bank and cash balance per books.

Prepare the bank reconciliation for Company B, as on August 31, 20--.

Company B
Bank Reconciliation
August 31, 20--
Bank statement balance $1,323
Add: Deposit in transit 599
  1,922
Deduct: Outstanding checks:  
 Number: 928$150 
 Number: 929292442
Adjusted bank statement balance $1,480
   
Ledger balance of cash $1,563
Add:  
 Error in recording Check Number: 925 27.00
  1,590
Deduct:  
 NSF check from customer$95 
 Bank service and collection charges15110
Adjusted ledger balance of cash $1,480

Table (1)

Working Notes:

Calculate book error in recording Check Number: 925...

2.

To determine

Prepare the adjusting journal entries that arise due to bank reconciliation.

3.

To determine

Prepare the bank form to compute the adjusted bank balance.

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