On July 31, 2010, Fenton Company had a cash balance per books of $6,140. The sta

Question

On July 31, 2010, Fenton Company had a cash balance per books of $6,140. The statement from Jackson State Bank on that date showed a balance of $7,695.80. A comparison of the bank statement with the cash account revealed the following facts.
1. The bank service charge for July was $25.
2. The bank collected a note receivable of $1,500 for Fenton Company on July 15, plus $30 of interest. The bank made a $10 charge for the collection. Fenton has not accrued any interest on the note.
3. The July 31 receipts of $1,193.30 were not included in the bank deposits for July. These receipts were deposited by the company in a night deposit vault on July 31.
4. Company check No. 2480 issued to H. Coby, a creditor, for $384 that cleared the bank in July was incorrectly entered in the cash payments journal on July 10 for $348.
5. Checks outstanding on July 31 totaled $1,980.10.
6. On July 31 the bank statement showed an NSF charge of $690 for a check received by the company from P. Figura, a customer, on account.

Instructions

(b) Prepare the necessary adjusting entries at July 31

Explanation / Answer

Bank Recomciliation Statement July 31st, 2010 a) Balance as per bank statement $7,695.80 Add: Deposit in transit 1,193.10 Less: Checks outstanding -1,980.10 Correct Cash balance $6,908.80 Balance as per books $6,140 Add: Interest collection $30 Collect cash from notes receivable 1,500 1,530 $7,670 Less: Service charge $25 Bank charges for collection 10 NSF charged for a check received 690 Cheque issued to a creditor 384 1,109 6,561 b) Journals 1 Cash 1,530                Interest received 30               Notes receivable 1,500 2 Office expenses 725                Cash 725

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