The following information is available to reconcile Branch
Company’s book balance of cash with its bank statement cash balance as of July
31, 2016.
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On July 31, the
company’s Cash account has a $25,644 debit balance, but its July bank statement
shows a $28,034 cash balance.
Check No. 3031 for
$1,550 and Check No. 3040 for $767 were outstanding on the June 30 bank
reconciliation. Check No. 3040 is listed with the July canceled checks, but
Check No. 3031 is not. Also, Check No. 3065 for $551 and Check No. 3069 for
$2,318, both written in July, are not among the canceled checks on the July 31
statement.
In comparing the
canceled checks on the bank statement with the entries in the accounting
records, it is found that Check No. 3056 for July rent was correctly written
and drawn for $1,220 but was erroneously entered in the accounting records as
$1,210.
A credit
memorandum enclosed with the July bank statement indicates the bank collected
$9,500 cash on a non-interest-bearing note for Branch, deducted a $48
collection fee, and credited the remainder to its account. Branch had not
recorded this event before receiving the statement.
A debit memorandum
for $805 lists a $795 NSF check plus a $10 NSF charge. The check had been
received from a customer, Evan Shaw. Branch has not yet recorded this check as
NSF.
Enclosed with the July statement is a $14
debit memorandum for bank services. It has not yet been recorded because no
previous notification had been received.
Branch’s July 31
daily cash receipts of $10,652 were placed in the bank’s night depository on
that date but do not appear on the July 31 bank statement.
Required:
1. Prepare the bank reconciliation for this company as of
July 31, 2016.
2. Prepare the journal entries necessary to bring the company’s book balance of cash into conformity with the reconciled cash balance as of July 31, 2016.
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