The Fitzgerald Company maintains a checking account at the Bank of the North. Th

Question

The Fitzgerald Company maintains a checking account at the Bank of the North. The bank provides a bank statement along with canceled checks on the last day of each month. The October 31, 2016, bank statement included the following information: Balance, October 1, 2016 Deposits Checks processed Service charges NSF checks Monthly loan payment deducted $ 32,640 83,500 (72,700) (300) (1,550) directly by bank from account (includes $350 in interest) (2,850) Balance, October 31, 2016 $ 38,740 The company's general ledger cash (checking) account had a balance of $42,449 at the end of October Deposits outstanding totaled $4,174, and all checks written by the company were processed by the bank except for those totaling $5,570. In addition, a check for $450 for the purchase of office furniture was incorrectly recorded by the company as a $45 disbursement. The bank correctly processed the check during October Required 1. Prepare a bank reconciliation for the month of October

Explanation / Answer

a) Balance per Bank Statement 38,740 Add: Deposits in transit 4,174 Deduct: checks outstanding 5,570 correct cash balance 37,344 Balance per books 42,449 Deduct: Service charge 300 NSF Checks 1,550 loan payment 2,850 Error in recording 405 Corrected cash balance 37,344 b) Transact General Journal Debit Credit 1) Office furniture 405 Service charge 300 Accounts receivable 1,550 Bank loan 2,500 interest expense 350 cash 5,105 2) No Entry

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