Preparing a bank reconciliation
Jim Root Corporation operates four bowling alleys. The business just received the
On October 31, 2018, bank statement from City National Bank, and the statement shows
an ending balance of $910. Listed on the statement are an EFT rent collection of
$440, a service charge of $7, NSF checks totaling $50, and a $23 charge for printed
checks. In reviewing the cash records, the business identified outstanding checks totaling
$440 and a deposit in transit of $1,800. During October, the business recorded a
$260 check by debiting Salaries Expense and crediting Cash for $26. The business’s
Cash account shows an October 31 balance of $2,144.
1. Prepare the bank reconciliation at October 31.
2. Journalize any transactions required from the bank reconciliation.
The cash account is debited with $440.
The outstanding checks are those checks that are issued by the company but not yet cleared by the bank.
|Jim Root Corporation|
|Bank Reconciliation Statement|
|October 31, 2018|
Balance, October 31, 2018
Balance, October 31, 2018
Deposit in transit
Error in check
Adjusted bank balance, November 30, 2018
Adjusted cash balance November 30, 2018
The opening cash balance is $2,144, and the opening bank balance is $910. In the book, the EFT rent collection is added to the cash balance because this amount is directly deposited into the bank by the customer. The error check is subtracted because the wrong check amount is credited to the cash account. The amount of the NSF check is subtracted from the cash balance because the NSF check shows the insufficient bank balance of the customer.
(To record the receipt of the rent collection)
(To record the payment of printed check expenses)
(To record the payment of service charges)
The cash account is debited in the first entry because the amount of the rent is received. In the following two entries, the cash account is credited with $30 because of the printed check and service charge payment.
Using Excel for a Bank Reconciliation
Download an Excel template for this problem online in MyAccountingLab or at http://www.pearsonhighered.com/Horngren.
Lori Anders of Wilderness Associates is getting ready to prepare the October bank reconciliation.
The cash balance on the books of Wilderness Associates on October 31 is $3,546.
Lori reviews the bank statement, and notes the checking account balance at October 31 is $2,445. The bank statement also
reveals that the bank collected a note receivable on behalf of Wilderness Associates—the principal was $1,500 and the interest
was $15. One customer’s check for $29 was returned by the bank for insufficient funds. Two additional items on the bank statement
were the monthly EFT for the utilities, $250, and the bank service fee of $12. Lori notes that the cash deposit made on
October 31 of $3,300 does not appear on the statement, and that three checks totaling $975 had not cleared the bank account
when the bank statement was prepared.
1. Prepare the bank reconciliation for Wilderness Associates at October 31, 2018. Format appropriate cells with dollar signs and double
underlines. Use Excel formulas to calculate subtotals and totals.
2. Journalize the entries based on the bank reconciliation. For dollar amounts, use cell references on bank reconciliation
Fill in the missing information.
a. The vendor ships the inventory and sends a(n) __________ back to the purchaser.
b. After approving all documents, the purchaser sends a(n) __________ to the vendor.
c. When ordering merchandise inventory, the purchaser sends a(n) __________ to the vendor.
d. The purchaser receives the inventory and prepares a(n) __________.
Journalizing petty cash
Prepare the journal entries for the following petty cash transactions of Everly Gaming
March 1 Established a petty cash fund with a $250 balance.
31 The petty cash fund has $24 in cash and $235 in petty cash tickets
that were issued to pay for Office Supplies ($35) and Entertainment
Expense ($200). Replenished the fund and recorded the expenditures.
April 15 Increased the balance of the petty cash fund to $300.
94% of StudySmarter users get better grades.Sign up for free