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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 2, Northern Motel 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 $37 is for an NSF check written by T. R. Royce. Check no. 1617 for $75.50, payable to Mitchel Company (a creditor), was incorrectly recorded in the checkbook and journal as $57.50.

The ledger balance of Cash as of July 31 is $1,909.30. Outstanding checks as of July 31 are no. 1631, $118.20; no. 1632, $78.20; and no. 1633, $178.36. The accountant notes that the July 31 deposit of $630 did not appear on the bank statement.

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Required

  1. 1. Prepare a bank reconciliation as of July 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.

Check Figure

Adjusted ledger balance of cash, $1,831.30

1.

To determine

Prepare the bank reconciliation for N Motel, as on July 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 N Motel, as on July 31, 20--.

N Motel
Bank Reconciliation
July 31, 20--
Bank statement balance $1,576.06
Add: Deposit in transit 630.00
  2,206.06
Deduct: Outstanding checks:  
 Number: 1631$118.20 
 Number: 163278.20 
 Number: 1633178.36374.76
Adjusted bank statement balance $1,831.30
   
Ledger balance of cash $1,909.30
Add:  
   
Deduct:  
 NSF check from customer$37.00 
 Bank service and collection charges23.00 
 Error in recording Check Number: 161718.0078.00
Adjusted ledger balance of cash $1,831.30

Table (1)

Working Notes:

Calculate book error in recording Check Number: 1617...

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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