On August 1, 20X1, the accountant for Midwest Imports downloaded the company’s July 31, 20X1, bank statement from the bank’s website. The balance shown on the bank statement was $28,750. The July 31, 20X1, balance in the Cash account in the general ledger was $14,183. Ann Chen, the accountant for Midwest Imports, noted the following differences between the bank’s records and the company’s Cash account in the general ledger: An electronic funds transfer for $14,300 from Fabien Ricard, a customer located in France, was received by the bank on July 31. Check 1422 was correctly written and recorded for $1,200. The bank mistakenly paid the check for $1,240. The accounting records indicate that Check 1425 was issued for $69 to make a purchase of supplies. However, examination of the check online showed that the actual amount of the check was for $99. A deposit of $790 made after banking hours on July 31 did not appear on the July 31 bank statement. The following checks were outstanding: Check 1429 for $1,248 and Check 1430 for $140. An automatic debit of $261 on July 31 from MidComm for telephone service appeared on the bank statement but had not been recorded in the company’s accounting records. Required: Prepare a bank reconciliation for the firm as of July 31. Record general journal entries for the items on the bank reconciliation that must be journalized. Analyze: What was the effect on total expenses as a result of the general journal entries recorded?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Problem 9.6A (Static) Preparing a bank reconciliation statement and journalizing entries to adjust the cash balance. LO 9-5, 9-6, 9-7

On August 1, 20X1, the accountant for Midwest Imports downloaded the company’s July 31, 20X1, bank statement from the bank’s website. The balance shown on the bank statement was $28,750. The July 31, 20X1, balance in the Cash account in the general ledger was $14,183.

Ann Chen, the accountant for Midwest Imports, noted the following differences between the bank’s records and the company’s Cash account in the general ledger:

An electronic funds transfer for $14,300 from Fabien Ricard, a customer located in France, was received by the bank on July 31.
Check 1422 was correctly written and recorded for $1,200. The bank mistakenly paid the check for $1,240.
The accounting records indicate that Check 1425 was issued for $69 to make a purchase of supplies. However, examination of the check online showed that the actual amount of the check was for $99.
A deposit of $790 made after banking hours on July 31 did not appear on the July 31 bank statement.
The following checks were outstanding: Check 1429 for $1,248 and Check 1430 for $140.
An automatic debit of $261 on July 31 from MidComm for telephone service appeared on the bank statement but had not been recorded in the company’s accounting records.

Required:

Prepare a bank reconciliation for the firm as of July 31.
Record general journal entries for the items on the bank reconciliation that must be journalized.

Analyze:
What was the effect on total expenses as a result of the general journal entries recorded?

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