Question

Bank Reconciliation On July 31, Sullivan Company's Cash in Bank account had a balance of $9,381.58. On that date, the bank statement indicated a balance of $11,828.12. A comparison of returned checks and bank advices revealed the following: Deposits in transit July 31 amounted to $4,650.03. Outstanding checks July 31 totaled $1,908.27. The bank erroneously charged a $422.50 check of Solomon Company against the Sullivan bank account. A bank service charge has not yet been recorded by Sullivan Company of $32.50. Sullivan neglected to record $5,200.00 borrowed from the bank on a ten percent six-month note. The bank statement shows the $5,200.00 as a deposit. Included with the returned checks is a memo indicating that J. Martin's check for $832.00 had been returned NSF. Martin, a customer, had sent the check to pay an account of $858.00 less a $26 discount. Sullivan Company recorded a $141.70 payment for repairs as $1,417.00 Required a. Prepare a bank reconciliation for Sullivan Company at July 31. b. Prepare the journal entry (or entries) necessary to bring the Cash in Bank account into agreement with the reconciled cash balance on the bank reconciliation. Note: Do not round answers - enter using two decimal places, when needed.

Answer 1

Sullivan's Company

Bank Reconciliation Statement, July 31

BANK BOOK

Ending balance from $11,828.12 Balance from the ledger $9,381.58

bank statement.

Add : Add :

Deposit in transit $4,650.03 Note payable borrowed $5,200

from bank

Error by bank $422.50 Error in recording payment $1275.3

$ 16,900.65 $15,856.88

Less: Less :

Outstanding checks $1,908.27 Service charge $32.50

NSF Check $832

Reconciled cash balance $ 14992.38 Reconciled cash balance $14992.38

b).

Date Accounts titles and explanations Debit($) Credit($)

July 31 Cash 5,200.00

Notes payable 5,200.00

July 31 Cash 1275.3

Repair expenses 1275.3

July 31 bank charges 32.50

Cash 32.50

July 31 Accounts receivable 832

cash 832