Problem 7-6A When Sunland Holdings Ltd. recelved its bank statement for the mont
ID: 2409456 • Letter: P
Question
Problem 7-6A When Sunland Holdings Ltd. recelved its bank statement for the month of October, it showed that the company had a cash balance of $19,426 as at October 31. Sunland's general ledger showed a cash balance of $20,400 at that date. A comparison of the bank statement and the accounting records revealed the following information 1. Bank service and credit card charges for the month were $7 2. A cheque, in the amount of $570, from one of Sunland's customers that had been deposited during the last week of October was returned with the bank statement as "NSF." 3. Cheque #3421, which was a payment for utilities expenses, had been correctly written for $870 but had been incorrectly recorded in the general ledger as $780. 4. Sunland had written and mailed out cheques with a value of $2,570 that had not yet cleared the bank account. 5. During the month, the bank collected a $2,700 note receivable plus the outstanding interest of $243 on behalf of Sunland. The interest had already been accrued. 6. The cash receipts for October 31 amounted to $5,820 and had been deposited in the night drop slot at the bank on the evening of October 31. These were not reflected on the bank statement for October.Explanation / Answer
SUNLAND HOLDING LTD Bank Reconciliation Oct-31 Cash balance as per bank statement $ 19,426 Add: Deposit in transit $ 5,820 $ 25,246 Deduct: Outstanding checks $ 2,570 Adjusted cash balance per bank $ 22,676 Cash balance as per books $ 20,400 Add: Note received by bank $ 2,700 Interest received by bank $ 243 $ 2,943 $ 23,343 Less: Bank service charges $ 7 NSF Check $ 570 Clerical error in recording of utlities exp $ 90 $ 667 Adjusted cash balance as per book $ 22,676 Cash $ 2,943 Note receivable $ 2,700 Interest receivable $ 243 (To record EFT Collection Accounts receivable $ 570 Cash $ 570 (To record accounts receivable) Utilities expenses $ 90 Cash $ 90 (To adjust check 3421) Bank charges expense $ 7 Cash $ 7 (To record bank service charges)