FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Balance of the Cash account of Isofac Company on 31 August 2022 was $42,650, while balance of its bank statement on the same day was $40,400. Isofac adjusts its book monthly. Below is some additional information for August:
There were no outstanding checks and deposit in transit at the end of 31 July 2022
(1) The Company has correctly issued and recorded a check no.113 in the amount of $8,600 to purchase inventories from a supplier. But the bank statement showed the bank has cleared this check incorrectly as $6,800.
(2) The total deposit shown in the bank statement was $158,000 while the accounting records of Isofac showed the total deposit made in August was $183,000.
(3) Papal, a customer of Isofac, directly deposited $500 to Isofac’s bank account to settle its outstanding account.
(4) Three checks no. 54, $100; no.56, $200; no.60, $800, issued by Isofac were not found on the bank statement.
(5) A$1,500checkissuedbyacustomerShineLtd.infavourofIsofacwasreturnedbythebankbecause of insufficient fund.
(6) On 1 March, 2022 Isofact signed a 9% 6-month note receivable of $20,000. The note and full amount of the interest was credited directly to Isofac’s bank account on 31 August.
(7) The bank debited Isofac’s account $50 for bank charges.
Required:
(a) Preparethebankreconciliationstatementasat31August2022.
(b) Preparethenecessaryadjustingjournalentriestoupdatetheaccountingrecord.
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