Chapter 6, Problem 4PSB

1.

Summary Introduction

Introduction: Bank reconciliation statements means to reconcile entities’ or organization’s bank accounts and its financial statements. By reconciling the bank accounts and financial statements of the organization it outlines the withdrawals and deposits and other activities relating to the bank account which affects the financial status of the organizations. Bank reconciliation is a part of internal control system which helps to detect fraud.

To determine: To reconcile the bank balance and pass journal entries.

Answer to Problem 4PSB

By bank reconciliation statements organization financial dealings and errors can be seen. Bank reconciliation will make sure of the errors that occurred in bank accounts or financial statements of the organization.

Explanation of Solution

Particulars	Amount	Particulars	Amount
Bank statement balance	46822.40	Book balance	32878.30
Add: Deposit in transit	9583.10	Add: Bank collection of note receivable	19000
		Error in posting	9
	56405.5		51887.3
Deduct:		Deduct:
Outstanding cheque 1273	4589.30	NSF Cheque	745
Outstanding cheque 1282	400	Collection expenses	20
Outstanding cheque 1242	410.40	Bank service charge	17.50
		Miscellaneous charges	99
Adjusted bank balance	51005.8	Adjusted book balance	51005.8

2.

Summary Introduction

Introduction: Bank reconciliation statements means to reconcile entities’ or organization’s bank accounts and its financial statements. By reconciling the bank accounts and financial statements of the organization it outlines the withdrawals and deposits and other activities relating to the bank account which affects the financial status of the organizations. Bank reconciliation is a part of internal control system which helps to detect fraud.

To determine: To reconcile the bank balance and pass journal entries.

Answer to Problem 4PSB

By bank reconciliation statements organization financial dealings and errors can be seen. Bank reconciliation will make sure of the errors that occurred in bank accounts or financial statements of the organization.

Explanation of Solution

Journal entries for company’s books of accounts:

Date	Particulars	Amount	Amount
31 Dec	Cash A/c	9
	To office expense A/c		9
	( Being amount erroneously recorded )
31 Dec	Customer A/c	745
	Bank A/c	17.50
	To Cash A/c		762.5
	( Being dishonored cheque and processing fee recorded)
31 Dec	Bank Charges	99
	To Cash		99
	( Being cheque printing charges recorded)
31 Dec	Cash A/c	19000
	To Customer A/c		19000
	( Being collection by the bank recorded)
31 Dec	Bank Charges	20
	To Cash A/c		20
	( Being bank charges levied recorded)

3.

Summary Introduction

Introduction: Bank reconciliation statements means to reconcile entities’ or organization’s bank accounts and its financial statements. By reconciling the bank accounts and financial statements of the organization it outlines the withdrawals and deposits and other activities relating to the bank account which affects the financial status of the organizations. Bank reconciliation is a part of internal control system which helps to detect fraud.

To determine: To reconcile the bank balance and pass journal entries.

Answer to Problem 4PSB

By bank reconciliation statements organization financial dealings and errors can be seen. Bank reconciliation will make sure of the errors that occurred in bank accounts or financial statements of the organization.

Explanation of Solution

Debit Memorandum:

By sending the debit memorandum to customers, bank means to reduce the balance available in customer account. As by sending this bank signifies to that customer is unaware of it. Following entries may be recorded for same:

1. Bank charges levied by bank for providing services.
2. Customers dishonored cheques.
3. Collection of notes on behalf of client.

Credit Memorandum:

This is as opposite of debit memorandum this denote increased balance in customer account. Following entries may be specified for the same:

1. Reserved bank charges.
2. Collecting note behalf of client.