On July 31, Blossom Ltd. had a cash balance of $12,934 in its general ledger. Th

Question

On July 31, Blossom Ltd. had a cash balance of $12,934 in its general ledger. The bank statement from the Caisse Populaire on that date showed a balance of $21,722. A comparison of the bank statement with the Cash account revealed the following:

Cheques outstanding on June 30 totalled $2,738. Of these, $2,162 worth cleared the bank in July. All cheques written in July cleared the bank in July.

1. The bank statement included service charges and credit card fees of $118. 2. The bank statement included electronic collections from customers on account totalling $5,230. Blossom had not recorded the EFT. 3. A deposit of $3,100 made by another company was incorrectly added to Blossom’s account by the Caisse Populaire. 4. Salaries of $4,200 were paid electronically during the month. The company has already recorded these. 5.

Cheques outstanding on June 30 totalled $2,738. Of these, $2,162 worth cleared the bank in July. All cheques written in July cleared the bank in July.

a) prepare the bank reconcilliation at July 31 b)Prepare the journal entries required from the rconciliation

Explanation / Answer

a) Blossom Ltd. Bank Reconciliation For the Month Ended July 31 Bank statement balance 21722 Book balance 12934.00 Add: Add: EFT collections by bank 5230.00 21722.00 18164.00 Deduct: Deduct: Outstanding checks ($2738 - $2162) 576.00 Bank service charges and fees 118.00 Bank error in deposit 3100.00 3676.00 Adjusted bank balance 18046.00 Adjusted book balance 18046.00 b) Date Account Titles and Explanation Debit Credit Jul. 31 Cash 5230 Accounts receivable 5230 (To record EFT collections by bank) Jul. 31 Bank charges 118 Cash 118 (To record bank service charges and credit card fees)

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