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Financial Accounting: The Impact on Decision Makers

10th Edition

ISBN:9781305654174

Author:Gary A. Porter, Curtis L. Norton

Publisher:Gary A. Porter, Curtis L. Norton

Chapter6: Cash And Internal Control

Section: Chapter Questions

Problem 6.3E

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Given the following information to reconcile GCompany’s cash book balance with its bank statement balance as of July 31, 2021: a. Cheques #296 for $1,334 and #307 for $12,754 were outstanding on the September 30 bank reconciliation. Cheque #307 was returned with the October cancelled cheques, but cheque #296 was not. It was also found that cheque #315 for $893 and cheque #321 for $2,000, both written in July, were not among the cancelled cheques returned with the statement. b. In comparing the cancelled cheques returned by the bank with the entries in the accounting records, it was found that cheque #320 for the July rent was correctly written for $4,090 but was erroneously entered in the accounting records as $4,900. c. Also enclosed with the statement was a $74 debit memo for bank services. It had not been recorded because no previous notification had been received. d. A credit memo enclosed with the bank statement indicated that there was an electronic fund transfer related to a customer payment for $21,304. This transaction was not recorded by Montrose before receiving the bank statement. e. A debit memo for $3,251 listed a $3,202 NSF cheque plus a $49 NSF charge. The cheque had been received from a customer. It had been not recorded this bounced cheque before receiving the statement. f. The July 31 cash receipts, $6,900, were placed in the bank’s night depository after banking hours on that date and this amount did not appear on the bank statement. g. After all posting was completed on July 31, the company’s Cash account had a $13,219 debit balance but its bank statement showed a $29,355 balance. Required: Prepare a bank reconciliation for the company as of July 31, 2021

Definition Definition Financial journal in which only cash-related transactions are recorded. Cash transactions are posted chronologically in the cash book, which is also called a subsidiary book. All the cash receipts are recorded on the debit side and all the cash payments are recorded on the credit side. An important point to remember is that the cash book never shows a credit balance; only a debit balance is shown in the cash book.

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