Question

Sullivan Company has a Cash account balance of $8,112.62, and on September 30, the bank statement indicated a balance of $9,098.55. Using the following data, prepare a bank reconciliation and any necessary journal entries for Sullivan Company on September 30.

a. Deposits in transit amounted to $3,358.19.
b. Outstanding checks totaled $1,251.12.
c. The bank erroneously charged a $215 check of Solomon Company against the Sullivan bank account.
d. A $15 bank service charge has not yet been recorded by Sullivan Company.
e. Sullivan Company neglected to record $3,000 borrowed from the bank on a 10%, 6-month note. The bank statement shows the $3,000 deposit.
f. An NSF check in the amount of $640 from J. Martin in payment on account has been returned.
g. Sullivan Company recorded a $107 payment for repairs as $1,070.

Answer 1

Answer and Explanation:

The preparation of the bank reconcilliation statement is presented below:

Bank Books

Balance $9,089.55 $8,112.62

Add: deposit in transit $3,358.19 Add: note payable borrowed $3,000

Less: outstanding checks $1,251.12 Add: error in recording $963

Add: error by bank $215 ($1,070 - $107)

Less: bank charges $15

Less: NSF check $640

Updated balance $ 11,420.62 Updated balance $ 11,420.62

The journal entries are shown below:

On July 31

Cash $3,000

To Notes payable $3,000

(Being note payable is recorded)

Cash $963

To Repair expenses $963

(being error is recorded)

Bank charges $15

To Cash $15

(Being cash paid is recorded)

Account receivables $640

To Cash $640

(Being cash paid is recorded)