P8-4 Preparing a bank reconciliation and the related journal entries [20–25 min] The 31 August 2016 bank statement of Ward's Supacentre has just arrived from United Bank. To prepare Ward's bank reconciliation, you gather the following data: a Ward's Cash account shows a balance of $2900 on 31 August. b The bank statement includes two dishonoured cheques from customers: $400 and $110. c The following Ward cheques are outstanding at 31 August: Cheque no. Amount 237 $ 50 288 170 291 520 294 580 295 50 296 140 d Ward collects from a few customers by EFT. The August bank statement lists a $1300 EFT deposit for a collection on account. e The bank statement includes two special deposits that Ward hasn't recorded yet: $970 for dividend revenue, and $80, the interest revenue Ward earned on its bank balance during August. f The bank statement lists a $30 bank service charge. g On 31 August, Ward deposited $350, but this deposit doesn't appear on the bank statement. h The bank statement includes a $1000 deduction for a cheque drawn by Interstate Freight Company. Ward notified the bank of this error. The 31 August bank balance is $4870. i

P8-4 Preparing a bank reconciliation and the related journal entries [20–25 min] The 31 August 2016 bank statement of Ward's Supacentre has just arrived from United Bank. To prepare Ward's bank reconciliation, you gather the following data: a Ward's Cash account shows a balance of $2900 on 31 August. b The bank statement includes two dishonoured cheques from customers: $400 and $110. c The following Ward cheques are outstanding at 31 August: Cheque no. Amount 237 $ 50 288 170 291 520 294 580 295 50 296 140 d Ward collects from a few customers by EFT. The August bank statement lists a $1300 EFT deposit for a collection on account. e The bank statement includes two special deposits that Ward hasn't recorded yet: $970 for dividend revenue, and $80, the interest revenue Ward earned on its bank balance during August. f The bank statement lists a $30 bank service charge. g On 31 August, Ward deposited $350, but this deposit doesn't appear on the bank statement. h The bank statement includes a $1000 deduction for a cheque drawn by Interstate Freight Company. Ward notified the bank of this error. The 31 August bank balance is $4870. i

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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Sal's Surf Shop deposits all receipts in the bank and makes all payments by check. On July 31 the cash account had a balance of $6,105.42. The bank statement on July 31 reported a balance of $4,146.46. Upon comparing the bank statement to the books, the following items were found. а. A bank debit memo issued for an NSF check from a customer of $21.25. b. A bank credit memo issued for interest of $8.50 earned during the month. С. During the evening of July 31, a deposit of $1,948.25 was made, which is not shown on the bank statement. d. A bank debit memo issued for $18.50 for bank service charges. е. Checks for the amounts of $34.00, $17.85, and $93.25 were written during July but have not yet been received by the bank. f. The reconciliation from the previous month, June, showed outstanding checks of $260.80. One of these checks in the amount of $7.38 has not yet been received by the bank. g. After comparing the canceled checks to the bank statement, it was discovered that a check…
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Part ii. Prepare the journal entries resulting from the bank reconciliation
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The bank reconciliation shows the following adjustments: Deposits in transit: $852 Notes receivable collected by bank: $1,000; interest: $20 Outstanding checks: $569 Error by bank: $300 Bank charges: $30 Using the following accounts: Bank Errors Bank Service Charges Cash Deposits in Transit Interest Expense Interest Income Notes Receivable Outstanding Checks prepare the two correcting journal entries: DR [ Select ] ["Bank Service Charges", "Interest Expense", "Interest Income", "Bank Errors", "Cash"] [ Select ] ["$569", "$30", "$300", "$1,020", "$852"] CR [ Select ] ["Interest Expense", "Cash", "Bank Service Charges", "Interest Income", "Bank Errors"] [ Select ] ["$852", "$300", "$569", "$1,030", "$30"] and DR…
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3. Bank Reconciliation Barb Lee Inc. (BLI) is about to reconcile its bank statement for the month of May. Pertinent information follows: Bank statement balance $11,003.74. General ledger balance $8, 284.07. BLI mailed a deposit of $899.14 to the bank on May 28. The bank had not yet received it by month end. BLI issued cheques # 124 for $2,041.25; # 126 for $951.56; and #129 for $1,000 in May; however, these were not returned with the May 31 bank statement. BLI received notification that a cheque for $313 deposited to BLI's account was returned NSE. The bank levied a $32 returned cheque charge. The bank statement included a $29 service charge for the month.Required:a) Prepare the cash reconciliation for Barb Lee Inc. as at May 31. b) Prepare adjusting journal entries to correct for items noted in the cash reconciliations.