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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

Jim’s Fitness Center deposits all receipts in the bank each evening and makes all payments by check. On April 30, its ledger balance of cash is $1,515.10. The bank statement balance of cash as of April 30 is $1,920.42. Use the following information to reconcile the bank statement:

  1. a. The reconciliation for March, the previous month, showed three checks outstanding on March 31: no. 555 for $56.00, no. 556 for $428.25, and no. 557 for $20.00. Check no. 555 and no. 557 were returned with the April bank statement; however, check no. 556 was not returned.
  2. b. Check no. 565 for $120.00, no. 567 for $45.00, no. 569 for $15.00, and no. 570 for $18.15 were written during April and have not been returned by the bank.
  3. c. A deposit of $119.08 was placed in the night depository on April 30 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. 561, for $46, was written correctly, payable to J. L. Lang, the owner, for personal use, but was recorded in the checkbook as $64.
  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 Millie Smith in the amount of $95.

Required

  1. 1. Prepare a bank reconciliation as of April 30, 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 $1,413.10

1.

To determine

Prepare the bank reconciliation for JF Center, as on April 30, 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 JF Center as on April 30, 20--.

JF Center
Bank Reconciliation
April 30, 20--
Bank statement balance $1,920.42
Add: Deposit in transit 119.08
  2,039.50
Deduct: Outstanding checks:  
 Number: 556$428.25 
 Number: 565120.00 
 Number: 56745.00 
 Number: 56915.00 
 Number: 57018.15626.40
Adjusted bank statement balance $1,413.10
   
Ledger balance of cash $1,515.10
Add: Error in recording Check Number: 561 18.00
  1,533.10
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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