Bank reconciliation on July 31, Sullivan Company\'s cash in bank account had a b
ID: 2490946 • Letter: B
Question
Bank reconciliation on July 31, Sullivan Company's cash in bank account had a balance of $8,112.62. On that date, the bank statement indicated a balance of $9,098.55. A comparison of returned checks and bank advices revealed the following:
1. Deposits in transit July 31 amounted to $3,358.19.
2. Outstanding checks July 31 totaled $1,251.12
3. The bank erroneously charged a $215 check of Solomon Company against the Sullivan bank account.
4. A $15 bank service charge has not yet been recorded by Sullivan Company.
5. Sullivan neglected to record $3,000 borrowed from the bank on a ten percent six-month note. The bank statement shows the $3,000 as a deposit.
6. Included with the returned checks is a memo indicating that J.Martin's check for $640 had been returned NSF. Martin, a customer, had sent the check to pay an account of $660 less a $20 discount.
7. Sullivan Company recorded a $107 payment for repairs as $1,070.
REQUIRED
a. Prepare a bank reconciliation for Sullivan Company at July 31.
b. Prepare the journal entry (or entries) necessary to bring the Cash in Bank account into agreement with the reconciled cash balance on the bank reconciliation.
Explanation / Answer
a.
Sullivan's Company
Bank Reconciliation Statement
July 31
BANK
BOOK
Ending balance from bank statement
$ 9,098.55
Balance from general ledger
$ 8,112.62
Add:
Add:
Deposit in transit
$ 3,358.19
Note payable borrowed from bank
$ 3,000.00
Error by bank
$ 215.00
Error in recording payment
$ 963.00
$ 12,671.74
$ 12,075.62
Less:
Less:
Outstanding checks
$ 1,251.12
Service charge
$ 15.00
NSF Check
$ 640.00
Reconciled cash balance
$ 11,420.62
Reconciled cash balance
$ 11,420.62
b.
Date
Account titles and explanation
Debit
Credit
July 31
Cash
$ 3,000
Notes payable
$ 3,000
July 31
Cash
$ 963
Repair expenses
$ 963
July 31
Bank charges
$ 15
Cash
$ 15
July 31
Account receivables
$ 640
Cash
$ 640
Sullivan's Company
Bank Reconciliation Statement
July 31
BANK
BOOK
Ending balance from bank statement
$ 9,098.55
Balance from general ledger
$ 8,112.62
Add:
Add:
Deposit in transit
$ 3,358.19
Note payable borrowed from bank
$ 3,000.00
Error by bank
$ 215.00
Error in recording payment
$ 963.00
$ 12,671.74
$ 12,075.62
Less:
Less:
Outstanding checks
$ 1,251.12
Service charge
$ 15.00
NSF Check
$ 640.00
Reconciled cash balance
$ 11,420.62
Reconciled cash balance
$ 11,420.62
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