Problem 7-15 SHOW LIST OF ACCOUNTS LINK TO TEXT LINK TO TEXT Date Account Titles
ID: 340675 • Letter: P
Question
Problem 7-15
SHOW LIST OF ACCOUNTS
LINK TO TEXT
LINK TO TEXT
Date
Account Titles and Explanation
Debit
Credit
June 30
June 30
Problem 7-15
The cash account of Culver Corporation shows a ledger balance of $3,964.85 on June 30, 2017. The bank statement as at that date indicates a balance of $4,130. When the statement was compared with the cash records, the following facts were determined:1. There were bank service charges for June of $27. 2. A bank memo stated that Bao Dai’s note for $920 and interest of $39 had been collected on June 29, and the bank had made a charge of $6.90 on the collection. (No entry had been made on Culver’s books when Bao Dai’s note was sent to the bank for collection.) 3. Receipts for June 30 of $2,880 were not deposited until July 2. 4. Cheques outstanding on June 30 totalled $2,121.05. 5. On June 29, the bank had charged Culver Corporation’s account for a customer’s uncollectible cheque amounting to $442.20. 6. A customer’s cheque for $70 had been entered as $50 in the cash receipts journal by Culver Corporation on June 15 as a collection on account. 7. Cheque no. 742 in the amount of $495 had been entered in the cashbook as $459, and cheque no. 747 in the amount of $50.80 had been entered as $508. Both cheques were issued to pay for cash purchases of equipment. 8. In May 2017, the bank had charged a $22.50 Bridgeport Corp. cheque against the Culver Corporation account. The June bank statement indicated that the bank had reversed this charge and corrected its error.
Explanation / Answer
Note for 8): Since there was bank error in recording a transaction it didn't effect the Cash A/c balance. Hence there is no effect on Bank Reconciliation Statement.
Journal Entry
June 30 Cash A/c Dr. $3557.25
To Exp-Rectification. $3557.25
(To record correction entry for all amounts added to the balance as per books in the bank reconciliation statement)
June 30 Exp-Rectification a/c Dr. $3392.1
To cash a/c. $3392.1
(To record correction entry for all the amounts deducted from the balance as per books in the bank reconciliation statement)
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Balance as per Cash A/c (in books) $3964.85 Add: 2) Bank memo collected ($920+$39) $959 4) Cheques outstanding $2121.05 6) Customer's cheque wrongly entered ($70-$50) $20 7) Errors in recording Cheque no.747 $457.2 Total Additions $3557.25 Less: 1) Bank service charges $27 2) Collection charges on memo collection $6.90 3) Receipts not yet deposited $2880 5) Bank charged for uncollectible cheque $442.2 7) Error in recording cheque no.742 $36 Total deductions $3392.1 Balance as per Bank Statement $4130