write-out The following information pertains to the Family Grocery Store 1. Cash

Question

write-out The following information pertains to the Family Grocery Store 1. Cash balance per bank, May 31, $7,263. 2. Cash balance per books, May 31, $7,634. 3. May bank charges not recorded by the depositor $28. 4. Deposits in transit, May 31, $1,500. 5. Outstanding checks, May 31, $591. 6. The Bank collected $900 note for Family in May, plus interest $36, less fee of $20. The collection has not been recorded by Family and no interest has been accrued. 7. A deposit on May 5 was incorrectly recorded in the company's books as $330. The bank correcty recorded the deposit as $300. A NSF check was returned with the bank statement for $320. The NSF check was from customer Joe Smith as payment on his account. 8. 1. Prepare a bank reconciliation at May 31. 2. Journalize the adjusting entries at May 31 on the books of the Family Grocery Store

Explanation / Answer

Family Grocery Store

Family Grocery Store

Bank Reconciliation

31-May

Bank Statement

Company's Books

Ending Balance as per Bank Statement

$7,263

Ending balance as per cash account

$7,634

Additions:

Additions:

$

Deposit in transit

$1,500

collections by bank net of fee

$916

$8,763

Less:

Less: outstanding checks

($591)

NSF Check

$320

Corrected bank balance

$8,172

Bank charges

$28

Error in recording

$30

($378)

Corrected cash balance

$8,172

Notes:

Collections     $900

Add: interest   $36

Less: bank fee $20

Net collections $916

As per books $330
as per bank      $300

Excess recorded in cash book = $30

Adjusting Entries as at May 31 on the books of the Family Grocery Store:

No.

Account Titles and Explanation

Debit

Credit

1

Cash

$916

Miscellaneous expense

$20

Notes Receivable

$900

Interest Revenue

$36

(To record note collected by bank, including charges and interest revenue)

2

Accounts Receivable

$320

Cash

$320

(To record NSF check)

3

Sales Revenue

$30

Cash

$30

(To adjust deposit of $300 erroneously recorded as $330)

5

Miscellaneous expense

$28

Cash

$28

(To record bank charges)

Family Grocery Store

Bank Reconciliation

31-May

Bank Statement

Company's Books

Ending Balance as per Bank Statement

$7,263

Ending balance as per cash account

$7,634

Additions:

Additions:

$

Deposit in transit

$1,500

collections by bank net of fee

$916

$8,763

Less:

Less: outstanding checks

($591)

NSF Check

$320

Corrected bank balance

$8,172

Bank charges

$28

Error in recording

$30

($378)

Corrected cash balance

$8,172

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