On September 30, the Lemon Company has a cash balance per books of $10,608. The

Question

On September 30, the Lemon Company has a cash balance per books of $10,608. The bank statement from the Valley Bank on that date showed a balance of $17,004. A comparison of the statement with the cash account revealed the following facts: 1. The statement included a debit memo of $60 for the printing of additional company checks. 2. Cash sales of $845 on September 12, were deposited in the bank. The cash receipts journal entry and the deposit slip were incorrectly made for $854. The bank credited Lemon Company for the correct amount. 3. Outstanding checks at September 30 totaled $6,225, and deposits in transit were $1,225. 4. On September 18, the company issued check No. 1023 for $550 to M. Barker, on account. The check, which cleared the bank in September, was incorrectly journalized and posted to Lemon Company for $505. 5. A $1,450 note receivable was collected by the bank for Lemon Company on September 29 plus $75 interest. The bank charges a collection fee of $15 for this collection service. No entries have been made yet in Lemon's records to show the note as collected or accrue the interest. REQUIRED: 1. Using the bank reconciliation form below, reconcile the bank statement of Lemon Company. 2. When you have completed the reconciliation, journalize the adjusting entries needed to correct Lemon's cash account in the general journal below. Lemon Company Bank Reconciliation September 30

Explanation / Answer

1. Bank Reconciliation Statement of Lemon Company as on 30 September $ $ Bank Balance as per accounts (Cash Book) 10608 Less : Bank Charges not debited in cash book - Item 1 -60 Less : Deposits excess booked - Item 2 -9 Add : Cheques issued but not presented - Item 3 6225 Less : Cheques deposited not cleared - Item 4 -1225 Less : Cheque issued short booked - Item 4 -45 Add : Note receivable collected by bank plus interest 1525 - Item 5 Less : Bank Charges on Note - Item 5 -15 6396 Bank Balance per Bank Statement 17004 2. Adjusting Journal Entries $ $ i. Bank Charges A/c DR 60     To Bank A/c 60 ii. Cash Sales A/c DR 9      To Bank A/c 9 iii. M. Barker A/c DR 550       To Lemon Company A/c 505       To Bank A/c 45 iv. Bank A/c DR 1525       To Note Receivable A/c 1525 v. Bank Charges A/c DR 15      To Bank A/c 15

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