The following information pertains toFamily Video Company. 1. Cash balance per b

Question

The following information pertains toFamily Video Company.

1. Cash balance per bank, July 31,$7,263.

2. July bank service charge not recorded bythe depositor $28.

3. Cash balance per books, July 31,$7,284.

4. Deposits in transit, July 31,$1,500.

5. Bank collected $900 note for Family inJuly, plus interest $36, less fee $20. The collection has not beenrecorded by Family, and no interest has beenaccrued.

6. Outstanding checks, July 31,$591.

Instructions

(a) Prepare a bank reconciliation at July31.

(b) Journalize the adjusting entries atJuly 31 on the books of Family Video Company.

Explanation / Answer

a) Cash balance per bank statement: $7263 Add: Deposits intransit              +$1500 Less: Outstandingchecks           -$591                                                   --------                                                  $8172 Cash balance perbooks:                       $7284 Add: Collection of notes receivable     +$900         Collection ofinterest                   +$36 Less: Bank servicecharge                   -$28          Collectionfee                             -$20                                                     -------------                                                   $8172 b)                                                          Dr. Cr. July 31 Cash 888 Bank charge expense 28 Bank collection fee/expense 20      Notes Receivable 900      Interest Revenue 36

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