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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

The Quilt Shop deposits all receipts in the bank each evening and makes all payments by check. On July 31, its ledger balance of cash is $2,830.15. The bank statement balance of cash as of July 31 is $3,215.20. Use the following information to reconcile the bank statement:

  1. a. The reconciliation for June, the previous month, showed three checks outstanding on June 30: no. 1820 for $85.00, no. 1822 for $115.20, and no. 1823 for $120.00. Check no. 1820 and no. 1822 were returned with the July bank statement; however, check no. 1823 was not returned.
  2. b. Check no. 2500 for $255.00, no. 2517 for $332.00, no. 2518 for $115.00, and no. 2519 for $28.85 were written during July and have not been returned by the bank.
  3. c. A deposit of $446.80 was placed in the night depository on July 31 and did not appear on the bank statement.
  4. d. The canceled checks were compared with the entries in the checkbook, and it was observed that check no. 2587, for $26, was written correctly, payable to J. L. Lang, the owner, for personal use, but was recorded in the checkbook as $62.
  5. e. Included in the bank statement was a bank debit memo for service charges, $25.
  6. f. Included in the bank statement was an NSF check from Jeremy Jones in the amount of $30.

Required

  1. 1. Prepare a bank reconciliation as of July 31, assuming that the debit memo and NSF check have not been recorded.
  2. 2. Record the necessary entries in general journal form.

Check Figure

Adjusted ledger balance of cash $2,811.15

1.

To determine

Prepare the bank reconciliation for Q Shop, 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 Q Shop, as on July 31, 20--.

Q Shop
Bank Reconciliation
July 31, 20--
Bank statement balance $3,215.20
Add: Deposit in transit 446.80
  3,662.00
Deduct: Outstanding checks:  
 Number: 1823$120.00 
 Number: 2500255.00 
 Number: 2517332.00 
 Number: 2518115.00 
 Number: 251928.85850.85
Adjusted bank statement balance $2,811.15
   
Ledger balance of cash $2,830.15
Add: Error in recording Check Number: 2587 36.00
  2,866.15
Deduct:  
 Bank service and collection charges$25...

2.

To determine

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

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