CHAPTERZ 4) Adams Company received a bank statement for November, as follows: Fr
ID: 2593559 • Letter: C
Question
CHAPTERZ 4) Adams Company received a bank statement for November, as follows: From: Central Bank, Brooklyn, NY 11201 To: Adams Company, 1652 Bond Street, Brooklyn, NY 11212 DEPOSITS BALANCE DATE Nov CHECKS $8,921.78 2,482.53 5,164.78 5,096.12 12.00 SC 17 1,740.00 CM 251.92 4,646.19 26 197.11 NSF 2,791.24 $ 5,794.61 sc = service charge CM Credit Memo NSF Check returnecd DM Debit Memo The receipt of $1,740 on November 17 was for a $1,725 note collected by the bank, plus $20 current interest, minus a $5 service charge. Information from Adams Company records CASH DISBURSEMENTS CASH RECEIPTS Check No. 155 2,482.53 156 157 158 159 160 November 6 $ 5,069.12 5,164.78 215.92 623.65 4,646.19 1,838.40 2,791.24 29 All receipts were verified twice and confirmed to be correct The company noted that check # 157 was recorded correctly by the bank; the check was written in payment of an invoice from a supplier of office supplies. Cash balance on November 30 as per company books: Required $ 2,819.59 Prepare the bank reconciliation on November 30, for the Adams Company Prepare the appropriate journal entries that Adams should record as a result of the 1) 2) reconciliation.Explanation / Answer
1) Preparation of the Bank Reconciliation Statement of Adams Company for the Month End Nov 30th Amount$ Cash Balance as on 30th November as per Company 2819.59 I Additions : 1 Credit Memo not accounted ( Net) 1740.00 2 Payment Check no 160 not realized in Bank 1838.40 3 Payment Check no 158 not realized in Bank 623.65 4 Shortage accounted for Cash Receipt Dt.29th Nov 27.00 4229.05 II Deductions : 1 Check no 29 not realized in the Bank 1008.92 2 Service Charge on 11th Nov 12.00 3 Shortage accounted in the Check No 157 36.00 4 Check returned on 26th Nov 197.11 1254.03 Bank Balance as on 30th November 5794.61 2) Preparation of appropriate Journal Entries Particulars Debit Credit 1 Bank A/c Dr 1740.00 Service Charge A/c 5.00 To Accounts Receivable A/c 1725.00 To Current Interest A/c 20.00 Being accounting of the Credit Memo 2 Bank A/c Dr 27.00 To Accounts Receivable A/c 27.00 Being Shortage accounted for Cash Receipt Dt.29th Nov 3 Service Charge A/c 12.00 To Bank A/c Dr 12.00 Being accounting of the Service Charge on 11th Nov 4 Accounts Payable A/c 36.00 To Bank A/c Dr 36.00 Being Shortage accounted in the Check No 157 5 Accounts Payable A/c 36.00 To Bank A/c Dr 36.00 Being Check returned on 26th Nov, reversed now