P8-3A Prepare a bank reconciliation and adjusting entries . (LO 3) On May 31, 20
ID: 2487878 • Letter: P
Question
P8-3A
Prepare a bank reconciliation and adjusting entries.
(LO 3)
On May 31, 2017, Reber Company had a cash balance per books of $6,781.50. The bank statement from New York State Bank on that date showed a balance of $6,404.60. A comparison of the statement with the Cash account revealed the following facts.
1.The statement included a debit memo of $40 for the printing of additional company checks.
2.Cash sales of $836.15 on May 12 were deposited in the bank. The cash receipts journal entry and the deposit slip were incorrectly made for $886.15. The bank credited Reber Company for the correct amount.
3.Outstanding checks at May 31 totaled $576.25. Deposits in transit were $2,416.15.
4.On May 18, the company issued check No. 1181 for $685 to Lynda Carsen on account. The check, which cleared the bank in May, was incorrectly journalized and posted by Reber Company for $658.
5.A $3,000 note receivable was collected by the bank for Reber Company on May 31 plus $80 interest. The bank charged a collection fee of $20. No interest has been accrued on the note.
6.Included with the cancelled checks was a check issued by Stiner Company to Ted Cress for $800 that was incorrectly charged to Reber Company by the bank.
7.On May 31, the bank statement showed an NSF charge of $680 for a check issued by Sue Allison, a customer, to Reber Company on account.
Instructions
(a)
Prepare the bank reconciliation at May 31, 2017.
Adjusted cash balance per bank $9,044.50
(b)
Prepare the necessary adjusting entries for Reber Company at May 31, 2017.
Explanation / Answer
a. Balance as per Bank Statement 6404.6 Add: Deposit in Transit 2416.15 Add: Error by Bank -Stiner Check 800 Less: Outstanding checks -576.25 2639.9 Adjusted cash balance per bank 9044.5 Cash Balance per Cash Book 6781.5 Add: Net Note Receivable(3000+80-20) 3060 Less: NSF Check -680 Less: Error correction(886.15-836.15) -50 Less: Bank charges for checks -40 Less: Incorrect Debit(685-658) -27 2263 9044.5 b.) ACCOUNT TITLE Debit Credit Cash 3060 Miscellaneous Expense-BankCollection chgs. 20 Interest Revenue on Note receivable 80 Note Receivable 3000 Lynda Carsen 27 Cash 27 Sales 50 Cash 50
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