On August 1, 2019, the accountant for Western Imports downloaded the company’s J
ID: 2550247 • Letter: O
Question
On August 1, 2019, the accountant for Western Imports downloaded the company’s July 31, 2019, bank statement from the bank’s website. The balance shown on the bank statement was $28,760. The July 31, 2019, balance in the Cash account in the general ledger was $14,042.
Jenny Irvine, the accountant for Western Imports, noted the following differences between the bank’s records and the company’s Cash account in the general ledger:
An electronic funds transfer for $14,600 from Foncier Ricard, a customer located in France, was received by the bank on July 31.
Check 1422 was correctly written and recorded for $1,200. The bank mistakenly paid the check for $1,280.
The accounting records indicate that Check 1425 was issued for $60 to make a purchase of supplies. However, examination of the check online showed that the actual amount of the check was for $90.
A deposit of $900 made after banking hours on July 31 did not appear on the July 31 bank statement.
The following checks were outstanding: Check 1429 for $1,249, and Check 1430 for $141.
An automatic debit of $262 on July 31 from CentralComm for telephone service appeared on the bank statement but had not been recorded in the company's accounting records.
Required:
Prepare a bank reconciliation for the firm as of July 31.
Record general journal entries for the items on the bank reconiliation that must be journalized.
Analyze:
What effect on total expenses occurred as a result of the general journal entries recorded?
Explanation / Answer
BANK RECONCILIATION OF FIRM AS ON JULY 31
balance as per bank $ 28760
less - electronic fund transfer on 31 july not accounted by firm $ 14600
add- check 1422 excess paid by bank $ 80
less - check 1425 short amount recorded in books $ 30
less - Auto debit from central comm telephone $ 262
balance in general ledger $ 13948
Journal entries
1. bank account $ 14600
to foncier ricard $ 14600
(Being fund received from party)
2. Telephone charges $ 262
to bank account $ 262
(being telephone charges debited)
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