Problem 8-4 (IAA) hivy Company prepared the following bank reconciliation March
ID: 2327931 • Letter: P
Question
Problem 8-4 (IAA) hivy Company prepared the following bank reconciliation March 31 on balance Book Add: March 31 deposit 1,405,000 750,000 Collection of note Interest on note 2,500,000 150,000 3,400,000 4,805,000 Less: Cavalry Company'sdeposit to our account 1,100,000 Bank service charge 5,000 1,105,000 3,700,000 5,630,000 Adjusted book balance Bank balance Add: Error on check No. 175 45,000 5,675,000 Less: Preauthorized payment for light and water NSF check Outstanding checks 245,000 220,000 1,650,000 2,115,000 3,560,000 Adjusted bank balanoe Check No. 175 was made for the proper amount of P249,000 in payment of account. However the check was entered in the cash disbursements journal as P294,000. Chivalry Company authorized the bank to automatically pay its light and water bills as submitted directly to the bank. Required: Prepare a corrected bank b. Prepare adjusting entries on Mareh 31. 249Explanation / Answer
Chivalry Company Bank Reconciliation Statement For the month ended March 31, 20XX
Book balance 1,405,000
Add: Collection of note 2,500,000
Interest on note 150,000
Error in recording chk. No. 175 45,000 2,695,000
4,100,000
Less: Service charge 5,000
Light & water expense 245,000
NSF check 220,000 470,000
3,630,000
Bank balance 5,630,000
Add: Deposit in transit 750,000
Less: company deposite 1,100,000
Outstanding checks 1,650,000 2,750,000
3,630,000
Journal entries of Adjustment
Cash in bank A/c dr 2,695,000
To Note receivable 2,500,000
To Interest income 150,000
To Accounts Payable 45,000
Bank service charge A/c Dr 5,000
Utilities expenseA/c Dr 245,000
Accounts Receivable A/c Dr 220,000
To Cash in bank 470,000