5. Friends, Inc. received its bank statement for the month ended 12/31/18. The b

Question

5. Friends, Inc. received its bank statement for the month ended 12/31/18. The bank statement showed a balance of S10,102.87. The company's general ledger showed a balance of $8,656.11 The following items were dis when comparing the bank statement to the books of the company: 1. The bank charged check processing fees of $25.00. 2. There was a $1,825.52 automatic withdrawal to pay the mortgage Of the S1,825.52, $1,572.86 was for interest which had beern accrued. 3. The bank charged Friends, Inc. account $250.00 for a NSF check. The check was returned to Friends, Inc. and Friends, Inc. will seelk repayment of the $250 from the customer 4. A check for $210.50 written by Friends, Inc. was cleared by the bank on Friends Are Us, Inc.'s account. s. The bank collected a note receivable for Friends in the amount of S1,775.50 and deposited it to Friends' account. The principal repayment was for $1,490.00; the balance was interest, which had not been accrued. 6. The bank charged the company S50.00 to print new checks. 7, The bank correctly cleared check #2501for $482.00. The company had recorded this check in its books for $582.00. The check had been written in payment of utilities. . A $2,075.00 deposit was recorded on the company books on 12/31/18. The deposit was taken to the bank too late to be recorded on that day. The bank recorded the deposit on 1/2/19 9. Outstanding checks totaled S1,524.28 10. Friends' income tax refund of $2,062.00 was directly deposited in the bank account. Areceivable had been set up in 2018 in anticipation of the refund. Required Prepare a bank reconciliation in good form. b. Make all necessary journal entries to adjust Friends, Inc.'s books.

Explanation / Answer

Bank reconciliation Ending balance as per bank statement 10102.87 Add Deposit in transit 2075 2075 Less Outstanding checks 1524.28 Error by bank 210.5 1734.78 Adjusted bank balance 10443.09 Ending balance as per cash account 8656.11 Add Notes receivable 1490 Interest revenue 285.5 Income tax refund 2062 Error (582-482) 100 3937.5 Less Service charges 25 Mortgage loan 252.66 Interest expense 1572.86 Print check 50 NSF 250 2150.52 Adjusted cash balance 10443.09

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