Bank Reconciliation The cash account of Dixon Products reveals the following inf

Question

Bank Reconciliation The cash account of Dixon Products reveals the following information: Cash Balance, 4/30 Deposits during May The bank statement for May contains the following information: Bank balance, 4/30 Add: Deposits during May 11,800 37,600 Cheques written during May 41,620 $11,750 37,250 49,000 Less: Cheques paid during May $(40,230) NSF cheque from Frolin Inc. (190) Bank service charges (40)(40,460) Bank balance, 5/31 $8,540 A comparison of detailed company records with the bank statement indicates the following information: Deposits in transit Outstanding cheques The bank amounts are determined to be correct. At 4/30 $800 750 At 5/31 $1,150 2,140

Explanation / Answer

Solution:

Part 1 --- Bank Reconciliation for May

Dixon Products

Bank Reconciliation Schedule

May 31

Cash balance from bank statement

$8,540

Add:

Deposit in transit

$1,150

Less:

Outstanding Cheques

$2,140

Adjusted cash balance

$7,550

Cash balance from company records

(11800+37600-41620)

$7,780

Less:

Service Charges

$190

NSF cheque

$40

$230

Adjusted cash balance

$7,550

Part 2 – Journal Entries

May'31

Bank Service Charge Expense

$190

Cash

$190

(Record bank service charge)

May'31

Accounts Receivable

$40

Cash

$40

(Record NSF Cheque)

Part 3 –

Adjusted cash balance as per company records is reported for cash on the statement of financial position at May 31 = $7,550

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Dixon Products

Bank Reconciliation Schedule

May 31

Cash balance from bank statement

$8,540

Add:

Deposit in transit

$1,150

Less:

Outstanding Cheques

$2,140

Adjusted cash balance

$7,550

Cash balance from company records

(11800+37600-41620)

$7,780

Less:

Service Charges

$190

NSF cheque

$40

$230

Adjusted cash balance

$7,550

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