On July 31, the bank statement showed an NSF charge of $746 for a check received

Question

On July 31, the bank statement showed an NSF charge of $746 for a check received by the company from K. Wagner, a customer, on account.

Prepare the bank reconciliation as of july 31st

Also, prepare the necessary adjusting entries at July 1st

  

On July 31, 2014, Redeker Company had a cash balance per books of $6,410. The statement from Nashota State Bank on that date showed a balance of $7,960.80. A comparison of the bank statement with the Cash account revealed the following facts.
1. The bank service charge for July was $22. 2. The bank collected a note receivable of $1,671 for Redeker Company on July 15, plus $33 of interest. The bank made a $13 charge for the collection. Redeker has not accrued any interest on the note. 3. The July 31 receipts of $1,367.30 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 T. Laird, a creditor, for $384.00 that cleared the bank in July was incorrectly entered in the cash payments journal on July 10 for $348.00. 5. Checks outstanding on July 31 totaled $2,031.10. 6.

On July 31, the bank statement showed an NSF charge of $746 for a check received by the company from K. Wagner, a customer, on account.

Prepare the bank reconciliation as of july 31st

Also, prepare the necessary adjusting entries at July 1st

  

Explanation / Answer

cash balance per books      6,410.00 less bank service charge             22.00 add collection of note receivable      1,671.00 add collection of interest             33.00 less collection charge             13.00 less error correction (i.e.384.00 - 348.00)             36.00 less NSF check          746.00 Adjusted bal. per cash book      7,297.00 Balance per bank statement      7,960.80 add deposits in transit      1,367.30 less Checks outstanding      2,031.10 Adjusted bal. per bank statement      7,297.00 Cash 1,691.00 Collection fee        13.00 Notes Receivable 1,671.00 Interest revenue        33.00 Accoutn Receivable      746.00 Cash      746.00 (NSF Fees) Account Payable        36.00 Cash        36.00 (Error in collection) Bank fee        22.00 Cash        22.00

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