uestion #4 The following information is available regarding Stone Inc.\'s Bank i

Question

uestion #4 The following information is available regarding Stone Inc.'s Bank information for September 2017: 1. The balance on the September 30, 2017 Bank statement was $8,316.00. 2. The company's Cash ledger account showed a balance of $8,778.00 on September 30 3. Deposit of $800 made by Stone, late on September 30 was not included on the Bank statement. 4. A comparison between the cheques returned with the Bank statement and the company records indicates that the following cheques were still outstanding on September 30: No. 101 No. 112 S 641.00 5. 6. 7. A cheque for $1,206.00 from a customer was returned along with the September's bank statement as a NSF cheque. Stone intends to pursue payment from the customer A cheque written by Stone to pay an outstanding account in the amount of $191. was erroneously entered as $119. by Stone's bookkeeper. Bank service charges amounted to $50. Required: 1. 2. Prepare the September Bank Reconciliation for Stone Inc. Prepare necessary Journal Entries to record the adjustments from the Bank Reconciliation for Stone Inc. "Bank reconciliation is a waste of time as the timing differences between the bank statement and the books will be taken care of as time goes by." Do you agree with this statement? Why or why not? 3.

Explanation / Answer

PART-1)

Bank Bal

8316

Add Deposit

800

Less: O/S cheques

#101

-641

#112

-1025

Adj. Bal

7450

Book Bal.

8778

Less:

Error

-72

Service charges

-50

NSF cheque

-1206

Adj. Bal

7450

PART-2)

1) Dr. Bank service charge exp $50

Cr. Cash $50

2) Dr. Accounts receivable $1206

Cr. Cash $1206

3) Dr. Accounts Receivable $72

Cr. Cash $72

PART-3)

Bank reconciliation is a waste of time as timing difference between the bank statements and the books will be taken care of as time goes by. DISAGREED

A monthly bank reconciliation helps in the identification of any unusual transactions that might be caused by accounting errors or fraud.

Bank Bal

8316

Add Deposit

800

Less: O/S cheques

#101

-641

#112

-1025

Adj. Bal

7450

Book Bal.

8778

Less:

Error

-72

Service charges

-50

NSF cheque

-1206

Adj. Bal

7450

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