Exercise 7-6 Rachel Sells is unable to reconcile the bank balance at January 31.

Question

Exercise 7-6

Rachel Sells is unable to reconcile the bank balance at January 31. Rachel’s reconciliation is shown here.

33.00

$4,889.20

830.00

$4,955.20

(a) What is the proper adjusted cash balance per bank? (Round answers to 2 decimal places, e.g. 52.75.)

(b) What is the proper adjusted cash balance per books? (Round answers to 2 decimal places, e.g. 52.75.)

(c) Prepare the adjusting journal entries necessary to determine the adjusted cash balance per books. (Round answers to 2 decimal places, e.g. 52.75. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Date

Account Titles and Explanation

Debit

Credit

(To record bank service charge)

Open Show Work

SHOW LIST OF ACCOUNTS

LINK TO TEXT

Cash balance per bank $4,412.20 Add: NSF check 510.00 Less: Bank service charge

33.00

Adjusted balance per bank

$4,889.20

Cash balance per books $4,710.20 Less: Deposits in transit 585.00 Add: Outstanding checks

830.00

Adjusted balance per books

$4,955.20

Explanation / Answer

(a) proper adjusted cash balance per bank = (4412.20+585-830) = 4167.20

(b)  proper adjusted cash balance per books = (4710.20-510-33) = 4167.20

(C) Prepare the adjusting journal entries necessary to determine the adjusted cash balance per books.

Date accounts & explanation debit credit jan 31 Account receivable 510 Cash 510 (To record NSF check) Jan 31 Bank service charges 33 Cash 33 (To record bank service charge)

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