Bank Reconciliation On May 31, the Cash in Bank account of Wallace Company, a so

Question

Bank Reconciliation On May 31, the Cash in Bank account of Wallace Company, a sole proprietership, had a balance of $6,122.50 On that date, the bank statement indicated a balance of $7,933.50 A comparison of returned checks and bank advices revealed the following: 1. Deposits in transit May 31 totaled $2,709.05 2. Outstanding checks May 31 totaled $3,088.25 3. The bank added to the account $27.80 of interest income earned by Wallace during May 4. The bank collected a $2.400 note receivable for Wallace and charged a $20 collection fee. Both items appear on the bank statement. 5. Bank service charges in addition to the collection fee, not yet recorded were $20.00 6. Included with the returned checks is a memo indicating that L. Ryder's check for $686.00 had been returned NSF Ryder, a customer, had sent the check to pay an account of $700.00 less a discount of 2% 7. Wallace Company incorrectly recorded the payment of an account payable as $690.00 the check was for $960.00 Required a. Prepare a bank reconciliation for Wallace Company at May 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 reconciliati WALLACE COMPANY Bank Reconciliation May 31 Balance from general ledger Add: Add: Less: Collection Fee Add: Interest Income Subtotal Subtotal

Explanation / Answer

Bank Reconciliation Balance as per bank Statement 7,933.50 Balance from general ledger 6,122.50 Add:Deposit in transit 2,709.05 Add: note collected 2,400 less:collection fee 20 2,380 Add:interest income 27.8 Subtotal 10,642.55 Subtotal 8,530.30 less :outstanding checks 3,088.25 less:Bank collection charge 20 less:NSF Check 686 less:Check for 960          recorded as 690 270 976 Adjusted baalnce as per bank 7,554.30 Adjusted cash balance 7,554.30 General Journal Date Description Debit Credit 31-May Cash 2,380 Miscellaneous expense 20 Note receivable 2,400 31-May Cash 27.8 interest revenue 27.8 31-May Service charges 20 cash 20 31-May Account receivable 686 cash 686 31-May Accounts payable 270 cash 270

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