The following information is available to reconcile Branch Company%u2019s book b

Question

The following information is available to reconcile Branch Company%u2019s book balance of cash with its bank statement cash balance as of July 31, 2013.

On July 31, the company%u2019s Cash account has a $25,648 debit balance, but its July bank statement shows a $27,673 cash balance.

Check No. 3031 for $1,400 and Check No. 3040 for $692 were outstanding on the June 30 bank reconciliation. Check No. 3040 is listed with the July canceled checks, but Check No. 3031 is not. Also, Check No. 3065 for $476 and Check No. 3069 for $2,168, both written in July, are not among the canceled checks on the July 31 statement.

In comparing the canceled checks on the bank statement with the entries in the accounting records, it is found that Check No. 3056 for July rent was correctly written and drawn for $1,210 but was erroneously entered in the accounting records as $1,200.

A credit memorandum enclosed with the July bank statement indicates the bank collected $8,000 cash on a non-interest-bearing note for Branch, deducted a $40 collection fee, and credited the remainder to its account. Branch had not recorded this event before receiving the statement.

A debit memorandum for $805 lists a $795 NSF check plus a $10 NSF charge. The check had been received from a customer, Evan Shaw. Branch has not yet recorded this check as NSF.

Enclosed with the July statement is a $12 debit memorandum for bank services. It has not yet been recorded because no previous notification had been received.

Branch%u2019s July 31 daily cash receipts of $9,152 were placed in the bank%u2019s night depository on that date, but do not appear on the July 31 bank statement.

Prepare the adjusting entry required, if any, related to the July 31 cash balance

On July 31, the company%u2019s Cash account has a $25,648 debit balance, but its July bank statement shows a $27,673 cash balance.

Check No. 3031 for $1,400 and Check No. 3040 for $692 were outstanding on the June 30 bank reconciliation. Check No. 3040 is listed with the July canceled checks, but Check No. 3031 is not. Also, Check No. 3065 for $476 and Check No. 3069 for $2,168, both written in July, are not among the canceled checks on the July 31 statement.

In comparing the canceled checks on the bank statement with the entries in the accounting records, it is found that Check No. 3056 for July rent was correctly written and drawn for $1,210 but was erroneously entered in the accounting records as $1,200.

A credit memorandum enclosed with the July bank statement indicates the bank collected $8,000 cash on a non-interest-bearing note for Branch, deducted a $40 collection fee, and credited the remainder to its account. Branch had not recorded this event before receiving the statement.

A debit memorandum for $805 lists a $795 NSF check plus a $10 NSF charge. The check had been received from a customer, Evan Shaw. Branch has not yet recorded this check as NSF.

Enclosed with the July statement is a $12 debit memorandum for bank services. It has not yet been recorded because no previous notification had been received.

Branch%u2019s July 31 daily cash receipts of $9,152 were placed in the bank%u2019s night depository on that date, but do not appear on the July 31 bank statement.

Prepare the adjusting entry required, if any, related to the July 31 cash balance

• Prepare the adjusting entry required, if any, related to the July 31 cash balance.
• Prepare the adjusting entry required, if any, related to the outstanding checks.
• Prepare the adjusting entry required, if any, related to Check No. 3056.
• A credit memorandum enclosed with the July bank statement indicates the bank collected $8,000 cash on a non-interest-bearing note for Branch, deducted a $40 collection fee, and credited the remainder to its account. Branch had not recorded this event before receiving the statement. Prepare the adjusting entry required, if any.
• A debit memorandum for $805 lists a $795 NSF check plus a $10 NSF charge. The check had been received from a customer, Evan Shaw. Branch has not yet recorded this check as NSF. Prepare the adjusting entry required, if any.
• Enclosed with the July statement is a $12 debit memorandum for bank services. It has not yet been recorded because no previous notification had been received. Prepare the adjusting entry required, if any.
• Branch%u2019s July 31 daily cash receipts of $9,152 were placed in the bank%u2019s night depository on that date, but do not appear on the July 31 bank statement. Prepare the adjusting entry required, if any.

Explanation / Answer

Clark Company
Bank Reconciliation
July 31, 2005

Balance per bank $28,020

Plus deposit in transit $10,152

Less outstanding checks:
3031 ($1,380)
3065 ($336)
3069 ($2,148)

Adjusted bank balance $34,308


Balance per books $26,193

Note receivable collected $9,000
Collection fee for note receivable ($45)

NSF check charge back (Customer - Jim Shaw) ($795)
NSF charge (Customer - Jim Shaw) ($10)

Bank service charge ($15)

Check 3056 $1,250 for July rent was recorded as $1,230 ($20)

Adjusted book balance $34,308


Part 2

2005
July 31
Debit Cash $8,955
Debit Bank charges $45
Credit Notes receivable $9,000
To record collection of note receivable less collection fee

July 31
Debit Accounts receivable - Jim Shaw $805
Credit Cash $805
To record NSF check from Jim Shaw and add the NSF fee of $10 to his account

July 31
Debit Bank charges $15
Credit Cash $15
To record bank service charge

July 31
Debit Rent expense $20
Credit Cash $20
To correct recording of check 3056 for $1,250, which was recorded as $1,230


Part 3

(a)
(i) This would have no effect on the adjusted bank balance
(ii) The adjusted book balance would be understated by $54

(b)
(i) The adjusted bank balance would be overstated by $8,955
(ii) The adjusted book balance would be understated by $8,955

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