on December 31, 2017, Designer\'s Warehouse received a bank statement with an en
ID: 2575930 • Letter: O
Question
on December 31, 2017, Designer's Warehouse received a bank statement with an ending balance of $19,500. The balance in the firm's checkbook and Cash account on the same date was $20,580. The difference between the two balances is caused by the items listed below A $5,750 deposit made on December 30 does not appear on the bank statement. Check 1312 for $970 issued on November 29 and Check 1375 for $3,300 issued on December 30 have not yet been paid by the bank. *A credit memorandum shows that the bank has collected a $2,200 note receivable and interest of $220 for the firm. *A service charge of $50 appears on the bank statement. * A debit memorandum shows an NSF check for $1,050. (The check was issued by R. Donnelley, a credit customer.) The firm's records indicate that Check 1316 of December 1 was issued for $1,800 to pay the month's rent. However, the canceled check and the listing on the bank statement show that the actual amount of the check was $1,600. The bank made an error by deducting a check for $1,120 issued by another business from the balance of the account of Designer's Warehouse Instructions: 1. In the blank space provided, prepare a bank reconciliation statement for the firm as of December 31, 2017 2. In the General Journal provided, record entries for any items on the bank reconciliation statement that must be journalized. Date the entries December 31, 2017.Explanation / Answer
1. Bank Reconciliation Statement as on 31/12/2017:
Balance as per Bank Statement = $19500
Add:
a. deposit missing in bank statement = $5,750
b, bank charges not recorded in books = $50
c. NSF cheque(cheque deposided but rejected) = $1,050
d. amount erranously debited to our bank account by bank = $1120
Less:
a. note receivable and interest collected by bank but not recorded in books = $2,200+$220 = $2,420
b. cheques issued but not cleared = $970 +$3,300 = $4,270
c. Cheque amount of $1,600 as per bank, recorded as $1,800 in the books. = $200
Balance as per Cash Book = $20250
2. Journal entries to be made on 31/3/2017 are mentioned below:
a. Cash a/c Dr 200
To Rent a/c Cr 200
b. R, Donnelley a/c Dr $1,050
To Cash A/c Cr $1,050
c. Bank Charges a/c Dr $50
To Cash a/c Cr $50
d, Cash A/c Dr $2,420
To Interest a/c Cr $220
To notes receivable a/c $2,200
Note. 1. Deposit of $5,750 is assumed to be cash in transit.
2. error of $1,120 for incorrect Debit nedds to be rectified with the bank.
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