P7-3A On July 31, 2017, Keeds Company had a cash balance per books of S6,140. Th

Question

P7-3A On July 31, 2017, Keeds Company had a cash balance per books of S6,140. The statement from Dakota State Bank on that date showed a balance of $7,690.80. A comparison of the bank statement with the Cash account revealed the following facts. 1. The bank service charge for July was $25. 2. The bank collected S1,520 for Keeds Company through electronic funds transfer. 3. The July 31 receipts of S1,193.30 were not included in the bank deposits for July. These receipts were deposited by the company in a night deposit vault on July 31. 4. Company check No. 2480 issued to L. Taylor, a creditor, for $384 that cleared the bank in July was incorrectly entered in the cash payments journal on July 10 for S348. 5. Checks outstanding on July 31 totaled $1,860.10. 6. On July 31, the bank statement showed an NSF charge of S575 for a check received by the company from W. Krueger, a customer, on account. Instructions (a) Prepare the bank reconciliation as of July 31 Adjusted cash bal. $7,024.00 (b) Prepare the necessary adjusting entries at July 31

Explanation / Answer

a) Bank reconciliation :

Adjusting entry :

Balance as per bank statement 7690.80 Add: Deposit in transit 1193.30 8884.10 Less: Outstanding check (1860.10) Adjusted cash balance 7024.00 Balance as per cash book 6140 Add: Electronic fund transfer 1520 7660 Less; Bank service charges (25) Less: NSF check (575) Less; book error (384-348) (36) Adjusted cash balance 7024

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