Brown Company\'s bank statement for September 30 showed a cash balance of $1,350
ID: 2392579 • Letter: B
Question
Brown Company's bank statement for September 30 showed a cash balance of $1,350. The company's Cash account in its general ledger showed a $995 debit balance. The following information was also available as of September 30. a. A $125 debit memoranda is included with the bank statement and dealt with a customer's check for $100 marked NSF and returned to Brown Company by the bank. In addition, the bank charged the company's a $25 processing fee. b. The September 30 cash receipts, $1,250, were placed in the bank's night depository after banking hours on that date and this amount did not appear on the September 30 bank statement. c. A $15 debit memorandum for checks printed by the September 30 bank was included with the canceled checks. d. Outstanding checks amounted to $1,145. e. A customer's note for $900 was collected by the bank. A collection fee of $25 was deducted by the bank and the difference was deposited in the account. f Included with the canceled checks was a check for $275, drawn on another company, Browne Inc.Explanation / Answer
Solution:
Bank Reconciliation
Book balance of cash
995
Plus:
Proceeds of note less collection fee
875
1870
Minus:
Bank service charge
15
NSF check plus processing fee
125
Reconciled book balance
1,730
Bank statement balance
1350
Plus:
Deposit in transit
1250
Bank error
275
2,875
Minus:
Outstanding checks
1,145
Reconciled bank balance
1,730
Journal entries:
Debit
Credit
Cash
875
Service Charge Expense
25
Notes Receivable
900
Accounts Receivable
100
Service Charge Expense
25
Cash
125
Service Charge Expense
15
Cash
15
Bank Reconciliation
Book balance of cash
995
Plus:
Proceeds of note less collection fee
875
1870
Minus:
Bank service charge
15
NSF check plus processing fee
125
Reconciled book balance
1,730
Bank statement balance
1350
Plus:
Deposit in transit
1250
Bank error
275
2,875
Minus:
Outstanding checks
1,145
Reconciled bank balance
1,730
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