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P7.4 Solution - Financial Accounting with IFRS
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Keeds Company 2020. Prepare the bank reconciliation as of July 31. Prepare the necessary adjusting entries at July 31.
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Chapter 7 P7.4 SolutionFinancial Accounting with IFRS (4th Edition) by Weygandt
P7.4 (LO 3) On July 31, 2020, Keeds Company had a cash balance per books of $6,140. The statement
from Dakota State Bank on that date showed a balance of $7,690.80. A comparison of the bank statement
with Cash account revealed the following facts.
1. The bank service charge for July was $25.
2. The bank collected $1,520 for Keeds Company through electronic funds transfer.
3. The July 31 receipts of $1,193.30 were not included in the bank deposits for July. These receipts
were deposited by the company in a night deposit vault on July 31.
4. Company check No. 2480 issued to L. Taylor, a creditor, for $384 that cleared the bank in July was
incorrectly entered as a cash payment on July 10 for $348.
5. Checks outstanding on July 31 totaled $1,860.10.
6. On July 31, the bank statement showed an NSF charge of $575 for check received by the company
from W. Krueger, a customer, on account.
Instructions
a. Prepare the bank reconciliation as of July 31.
b. Prepare the necessary adjusting entries at July 31.
ANSWER :
a. Keeds Company
Bank Reconciliation Statement
July 31, 2020
Cash balance per bank statement $7,690.80
Add: Deposits in transit $1,193.30
$8,884.10
Less: Outsanding Checks $1,860.10
Adjusted cash balance per bank $7,024.00
Cash balance per book $6,140.00
Add: Electronic funds transfer receive $1,520.00
$7,660.00
Less:
Bank service charge $25.00
Error in recording check No. 2480 (384-348) $36.00
NSF charge $575.00
$636.00
Adjusted cash balance per books $7,024.00
b. Date General Journal Debit Credit
July 31, 2020 Cash $1,520.00
Accounts receivable $1,520.00
(To record EFT received)
July 31, 2020 Bank charge expenses $25.00
Cash $25.00
(To record bank service charge)
July 31, 2020 Accounts payable $36.00
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