Bank Reconciliation On May 31, the Cash in Bank account of Wallace Company, a so

Question

Bank Reconciliation On May 31, the Cash in Bank account of Wallace Company, a sole proprietership, had a balance of $24,490.00 On that date, the bank statement indicated a balance of $31,734.00. A comparison of returned checks and bank advices revealed the following: 1. Deposits in transit May 31 totaled $10,836.20 2. Outstanding checks May 31 totaled $12,353.00 3. The bank added to the account $111.20 of interest income earned by Wallace during May. 4. The bank collected a $9,600 note receivable for Wallace and charged a $80 collection fee. Both items appear on the bank statement. 5. Bank service charges in addition to the collection fee, not yet recorded were $80.00. 6. Included with the returned checks is a memo indicating that L. Ryder's check for $2,744.00 had been returned NSF. Ryder, a customer, had sent the check to pay an account of $2,800.00 less a discount of 296 7. Wallace Company incorrectly recorded the payment of an account payable as $2,760.00 the check was for $3,840.00. Required a. Prepare a bank reconciliation for Wallace Company at May 31. b. Prepare the journal entry (or entries) necessary to bring the Cash in Bank account into agreement with the reconciled cash balance on the bank reconciliation.

Explanation / Answer

BANK RECONCILIATION STATEMENT balance as per bank statement 31734 balance from general ledger 24490 Add: Add: Note receivable 9600 Deposits in transit 10836.2 Less: Collection charges 80 9520 Add: Interest income 111.2 Subtotal 42570.2 Subtotal 34121.2 Less: Less: Service and collection charges 80 Outstanding checks 12353 Less: NSF check 2744 Less: Check for 2760 Recorded as 3840 1080 3904 Adjusted balance as per bank statement 30217.2 Adjusted balance as per books 30217.2 GENERAL JOURNAL DATE DESCRIPTION DEBIT CREDIT 31-May Notes receivable 9600 Misc expense 80 cash 9520 31-May cash Account Dr. 111.2    Interest revenue 111.2 31-May Service charges expense Dr. 80     Cash Account 80 31-May Accounts recievable Dr. 2800     Sales discount 56     Cash Account 2744 31-May Accounts payable Dr. 1080     Cash Account 1080

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