Exercise 7-6 Rachel Sells is unable to reconcile the bank balance at January 31.

Question

Exercise 7-6

Rachel Sells is unable to reconcile the bank balance at January 31. Rachel’s reconciliation is shown here.

42.00

$5,135.20

835.00

$5,219.20

(a) What is the proper adjusted cash balance per bank? (Round answers to 2 decimal places, e.g. 52.75.)

(b) What is the proper adjusted cash balance per books? (Round answers to 2 decimal places, e.g. 52.75.)

(c) Prepare the adjusting journal entries necessary to determine the adjusted cash balance per books. (Round answers to 2 decimal places, e.g. 52.75. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Date

Account Titles and Explanation

Debit

Credit

(To record bank service charge)

Open Show Work

Cash balance per bank $4,662.20 Add: NSF check 515.00 Less: Bank service charge

42.00

Adjusted balance per bank

$5,135.20

Cash balance per books $4,960.20 Less: Deposits in transit 576.00 Add: Outstanding checks

835.00

Adjusted balance per books

$5,219.20

Explanation / Answer

(a) What is the proper adjusted cash balance per bank

Adjusted bank balance = 4662.20+576-835 = 4403.20

(b) What is the proper adjusted cash balance per books?

Adjusted cash balance = 4960.20-515-42 = 4403.20

Adjusting entry :

Date account & explanation debit credit Jan 31 Account receivable 515      Cash 515 (To record NSF check) Jan 31 Bank service charges 42      Cash 42 (To record bank service charge)

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