Problem 7-6A Bank service and credit card charges for the month were $6. (a) Pre
ID: 2569012 • Letter: P
Question
Problem 7-6A
Bank service and credit card charges for the month were $6.
(a) Prepare the bank reconciliation at October 31. (List items that increase balance as per bank & books first.
(b)Prepare any journal entries required from the reconciliation. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.
Problem 7-6A
When Blossom Holdings Ltd. received its bank statement for the month of October, it showed that the company had a cash balance of $16,413 as at October 31. Blossom’s general ledger showed a cash balance of $20,050 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 $6.
.2. A cheque, in the amount of $620, from one of Blossom’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 $860 but had been incorrectly recorded in the general ledger as $680. 4. Blossom had written and mailed out cheques with a value of $2,860 that had not yet cleared the bank account. 5. During the month, the bank collected a $1,100 note receivable plus the outstanding interest of $99 on behalf of Blossom. The interest had already been accrued. 6. The cash receipts for October 31 amounted to $6,890 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
a) Bank Reconciliation Cash balance as per bank statement 16,413 Add: Deposits in transit 6,890 23,303 less: outstanding cheques 2,860 Adjusted bank balance 20,443 Cash balance as per cash book 20,050 Add: note receivable 1,100 interest income 99 1,199 21,249 less: NSF 620 Error in recording (860-680) 180 bank service charge 6 806 20,443 b) Journal Entries Accounting titles & Explanations Debit Credit cash 1,199 note receivable 1,100 interest income 99 Account receivable 620 Cash 620 Utilities expense 180 cash 180 Bank service charges 6 cash 6