On September 30, the Lemon Company has a cash balance per books of $10,608. The

Question

On September 30, the Lemon Company has a cash balance per books of $10,608. The bank statement from the Valley Bank on that date showed a balance of $17,004. A comparison of the statement with the cash account revealed the following facts:

1. The statement included a debit memo of $60 for the printing of additional company checks.

2. Cash sales of $845 on September 12, were deposited in the bank. The cash receipts journal entry and the deposit slip were incorrectly made for $854. The bank credited Lemon Company for the correct amount.

3. Outstanding checks at September 30 totaled $6,225, and deposits in transit were $1,225.

4. On September 18, the company issued check No. 1023 for $550 to M. Barker, on account. The check, which cleared the bank in September, was incorrectly journalized and posted to Lemon Company for $505.

5. A $1,450 note receivable was collected by the bank for Lemon Company on September 29 plus $75 interest. The bank charges a collection fee of $15 for this collection service. No entries have been made yet in Lemon's records to show the note as collected or accrue the interest.

: 1. Using the bank reconciliation form below, reconcile the bank statement of Lemon Company.

2. When you have completed the reconciliation, journalize the adjusting entries needed to correct Lemon's cash account in the general journal below. Lemon Company Bank Reconciliation September 30

Balance Per Bank Statement, September 30

$

Add:

  

                           Subtotal:

$

Less:

Adjusted Balance Per Bank, September 30

Balance Per Books, September 30

$

Add:

$

                        Subtotal:

$

Less:

$

  

  

Adjusted Balance Per Books, September 30

$

Balance Per Bank Statement, September 30

$

Add:

  

                           Subtotal:

$

Less:

Adjusted Balance Per Bank, September 30

Balance Per Books, September 30

$

Add:

$

                        Subtotal:

$

Less:

$

  

  

Adjusted Balance Per Books, September 30

$

Explanation / Answer

Balance as per book 10608 Balance as per bank 17004 Add:Note received (add Interest less charges) [1450+75-15] 1510 Add:Deposit in transit 1225 less:Debit memo for serive charge (60) less:Outstanding checks (6225) Error in recording (554-545) (9) Error in journalising [550-505] (45) Reconciled balance 12004 Reconciled balance 12004 Date Title Debit credit 1 cash 1510 Bank charges 15 note receivable 1450 Interest 75 2 Bank charges 60 cash 60 3 sales 9 cash 9 4 Accounts payable 45 cash 45

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