In reviewing cheques returned by the bank, the bookkeeper discovered that cheque
ID: 2591316 • Letter: I
Question
In reviewing cheques returned by the bank, the bookkeeper discovered that cheque #28, for delivery expense, was recorded in the Cash Disbursements Journal correctly as $4,900.
• The NSF cheque for $14,337 was that of customer Oprah Winney, deposited in March.
• On the bank statement, the payment for $16,052 is regarding a note payable.
• There is also a deposit of $121,000 dated April 30. It is an investment made by the owner into the business (the bank transferred the funds electronically from the owner’s personal account to his business account, which is why it was not recorded in the Cash Receipts Journal).
2 - Record the April bank service charges.
3 - Record the April interest expense.
4 - Record the April payment on note.
5 - Record the investment by owner.
Stewart Recording Studio, owned by Ron Stewart, showed the following bank reconciliation at March 31 Stewart Recording Studio Bank Reconciliation March 31, 2017 Bank statement balance Add $22,200 Book balance $31,085 Deposit of March 31 in transit 10,045 $32,245 Deduct: Outstanding cheques #14 #22 $843 317 1,160 $31,085 Adjusted book balance Adjusted bank balance $31,085 Acct. No. 101 Balance Cash Debit Credit Date Explanation PR 2017 31,085 102,847 10,847 March 31 Balance April 30 30 CR17 CD13 71,762 92,000 A list of deposits made and cheques written during April, taken from the Cash Receipts Journal and Cash Disbursements Journal, is shown below Deposits Made April 7 13 18 23 27 30 S 693 4,620 5,926 13,961 1,758 44,804 Total April Cash Receipts $71,762Explanation / Answer
a. Stewart Recording Studio Bank Reconciliation 30-Apr-17 Bank statement balance 110805 Book balance 10847 Add: Add: Deposit of April 30 in transit 44804 Owner's contribution credited by bank 121000 Error in recording check #28 4500 49304 131847 160109 Deduct: Deduct: NSF check 14337 Outstanding checks: Bank Loan repayment 16052 #14 843 Interest on bank loan 498 #22 317 Bank service charge 177 #25 944 #27 4271 #30 41440 #32 11511 59326 Adjusted bank balance 100783 Adjusted book balance 100783 b. Date Account Titles and Explanation Debit Credit 2017 Apr. 30 Cash 121000 Ron Stewart, Capital 121000 (To record capital brought in) Apr. 30 Accounts receivable 14337 Cash 14337 (To record NSF check) Apr. 30 Bank loan 16052 Interest expense 498 Cash 16550 (To record payment of loan and interest thereon) Apr. 30 Bank service charge expense 177 Cash 177 (To record bank service charges)
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