Instructions: Ignoring GST, use the data from P7-3B and complete the following r
ID: 2338935 • Letter: I
Question
Instructions:
Ignoring GST, use the data from P7-3B and complete the following requirements:
a) Prepare the journal entries suggested by the data and note the following: for fact #5, assume $50 of interest had been accrued on 30 April; for fact #7, assume the NSF check will be re-deposited. Assume that all JEs were posted immediately, and that the Cash account was updated.
b) Prepare a bank reconciliation at 31 May 2017.
P7-3B Aglife Genetics Ltd. of Lancashire spreads herbicides and applies liquid fertilizer for local farmers. On May 31, 2017, the company's Cash account per its general ledger showed the following balance. CASH DatExplanationRef May 31 NO. 101 Credit Balance 13,287 Debit The bank statement from Lancashire Bank on that date showed the following balance. Lancaster Bank Deposits and Credits Checks and Debits Daily Balance 5/31 12,648 of the details on the bank statement with the details in the Cash account revealed the following facts. 1. The statement included a debit memo of £35 for the printing of additional company 2. Cash sales of £1,720 on May 12 were deposited in the bank. The cash receipts journal entry and the deposit slip were incorrectly made for £1,820. The bank credited Aglife Genetics for the correct amount. 3. Outstanding checks at May 31 totaled £1,425, and deposits in transit were £2,100. 4. On May 18, the company issued check no. 1181 for £1,102 to M. Datz on account. The check, which cleared the bank in May, was incorrectly jourmalized and posted by Aglife Genetics for £110 5. A £4,000 note receivable was collected by the bank for Aglife Genetics on May 31 plus £100 interest. The bank charged a collection fee of £25. No interest has been accrued on the note. 6. Included with the cancelled checks was a check issued by River Lune Company to Carol Mertz for £900 that was incorrectly charged to Aglife Genetics by the bank On May 31, the bank statement showed an NSF charge of £2,012 for a check issued by Tyler Gricius, a customer, to Aglife Genetics on account. 7.Explanation / Answer
a) Bank Reconciliation Particulars Amount Amount Balance as per Cash account 13287 Add: collections from customers (4000+100-25) 4075 Less Bank charges for printing checks 35 Wrong amount of sales 100 Wrong amount from check issue (1102-110) 992 NSF checks 2012 Adjusted cash balance as per books 14223 Balance as per bank statement 12648 Add: Deposit in transit 2100 Incorrect issue records 900 3000 less: outstanding checks 1425 Adjusted cash balance as per bank 14223 b) Date Accounts and Explanation Debit Credit 31-May-17 cash 4075 bank collection charges 25 interest revenue 100 accounts receivable 4000 31-May-17 bank charges for printing checks 35 cash 35 31-May-17 sales revenue 100 cash 100 31-May-17 Accounts payable 992 cash 992 31-May-17 accounts receivable 1425 cash 1425