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ID: 2522283 • Letter: R
Question
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The following information is available to reconcile Branch Company’s book balance of cash with its bank statement cash balance as of July 31, 2017.
On July 31, the company’s Cash account has a $25,860 debit balance, but its July bank statement shows a $26,881 cash balance.
Check No. 3031 for $1,000 and Check No. 3040 for $492 were outstanding on the June 30 bank reconciliation. Check No. 3040 is listed with the July canceled checks, but Check No. 3031 is not. Also, Check No. 3065 for $276 and Check No. 3069 for $1,768, both written in July, are not among the canceled checks on the July 31 statement.
In comparing the canceled checks on the bank statement with the entries in the accounting records, it is found that Check No. 3056 for July rent expense was correctly written and drawn for $1,220 but was erroneously entered in the accounting records as $1,210.
The July bank statement shows the bank collected $8,500 cash on a noninterest-bearing note for Branch, deducted a $43 collection expense, and credited the remainder to its account. Branch had not recorded this event before receiving the statement.
The bank statement shows an $805 charge for a $795 NSF check plus a $10 NSF charge. The check had been received from a customer, Evan Shaw. Branch has not yet recorded this check as NSF.
The July statement shows a $13 bank service charge. It has not yet been recorded in miscellaneous expenses because no previous notification had been received.
Branch’s July 31 daily cash receipts of $9,652 were placed in the bank’s night depository on that date but do not appear on the July 31 bank statement.
2. Prepare the journal entries necessary to bring the company’s book balance of cash into conformity with the reconciled cash balance as of July 31, 2017. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Journal entry worksheet
Record the adjusting entry required, if any, related to the July 31 cash balance.
Record the adjusting entry required, if any, related to the outstanding checks.
Record the adjusting entry required, if any, related to Check No. 3056.
Record the adjusting entry required, if any, related to the non-interest-bearing note.
Record the adjusting entry required, if any, related to the NSF check.
Record the adjusting entry required, if any, related to bank service charges.
Record the adjusting entry required, if any, related to the July 31 deposit.
Note: Enter debits before credits.
Explanation / Answer
BRANCH COMPANY Bank Reconciliation 31-Jul-17 Bank statement balance $26,881 Book balance $25,860 Add: Add: Deposit of July 31 $9,652 Proceeds of note less collection charge $8,457 9652 8457 $36,533 34317 Deduct: Deduct: Check No. 3031 1,000 NSF check including fee 805 Check No. 3065 276 Service charge 13 Check No. 3069 1,768 Error (Check 3056) 10 3044 828 Adjusted bank balance $33,489 Adjusted book balance 33489 Transaction General Journal Debit Credit a. No journal entry required b. No journal entry required c. Rent expense 10 Cash 10 d. Cash 8,457 Collection expense 43 Notes receivable 8,500 e. Accounts receivable—E. Shaw 805 Cash 805 f. Miscellaneous expenses 13 Cash 13 g. No journal entry required
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