Problem 9-3 (IAA) provided the following data Fabulous Company cash on July 31 B

Question

Problem 9-3 (IAA) provided the following data Fabulous Company cash on July 31 Bank statement Checks drawn Balance, July 31 Charges: 2,700,000 No. 101 No. 102 No. 103 No. 104 No. 105 No. 106 No. 107 No. 108 600,000 700,000 300,000 400,000 450,000 600,000 650,000 500,000 Checks paid4,000,000 20,000 Service charge Credits: Deposits 3,500,000 Note collected 1500,00 Balance of cash per book on July 1, P1,270,000. Cash per cash book for the month of July P3,400,000. receipts Checks paid by bank include all checks issued during the month of July except No. 107 and No. 108. On July 31 cash received but not deposited in bank, P400,000 Required: a. Prepare bank reconciliation on July 1 and July 31. b. Prepare adjusting entries on July 31. 286

Explanation / Answer

Requirement 1 Fabulous Company Bank Reconcilaitaion tatement As on July 1 Balance as per Bank 1720000 Add: Deposit in transit 500000 2220000 Less: Unpaid checks 950000 Adjusted bank balance 1270000 Balance as per books 1270000 Bank Balance on July 1 1720000 Add: Credits 5000000 6720000 Less: Charges 4020000 Bank Balance on July 31 2700000 Fabulous Company Bank Reconcilaitaion tatement As on July 31 Balance as per Bank 2700000 Add: Deposits in transit 400000 3100000 Less: Checks unpaid - No. 107 and 108 1150000 Adjusted Bank Balance 1950000 Balance as per books 470000 Add: Note collected 1500000 1970000 Less: Service charges 20000 Adjusted cash balance 1950000 Requirement 2 JOURNAL Debit Credit Cash 1500000     Note receivable 1500000 (Note collected by bank) Misc. Expense 20000     Cash 20000 (Service charges debited by bank)

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