Question

The following data were gathered to use in reconciling the bank account of Reddan Company:

Balance per bank $18,250
Balance per company records 12,045
Bank service charges 30
Deposit in transit 3,500
Note collected by bank with $160 interest 4,160
Outstanding checks 5,575
A. What is the adjusted balance on the bank reconciliation?
B. Journalize any necessary entries for Reddan Company based on the bank reconciliation. Refer to the Chart of Accounts for exact wording of account titles.

Answer 1

A) The adjusted Balances in the Company Records $16,175. (See Attachment for calculation)

B) Journals

1) Dr Bank Charge Expense Cr Bank Account $30 (Bank Service Charge)

2) Dr Bank Account Cr Notes Receivable $4,160

3) Dr Interest on Notes Expense Cr Notes Receivable $160 (Interest on Note Receivable)

Explanation:

Se attachment

Answer 2

Reddan Company

Balance as per Cash Book = $12,045

Add note collected by bank = $4,000

Add outstanding interest on note= $160.

Add outstanding checks = $5,575

Deduct bank charges = $30

Deduct deposit in transit = $3,500

Adjusted cash balance = $18,250

Step 2/compare adjusted cash balance to bank balance

Adjusted cash balance = $18,250

Bank balance = $18,250

Difference = Nil.

B.

Journal entries

Dr. 110 Cash with $4,000

Cr. 131 Note receivable with $4,000

(note collected by bank)

Dr. 110 Cash with $160

Cr. 610 interest revenue with $160

(Interest on note collected by bank)

Dr. 110 Cash with $5,575

Cr. 210 Account payable with $5,575

(Outstanding checks unpresented)

Dr. 590/miscellenous expese with $30.

Cr. 110 Cash with $30

(Bank charges expenses)

Dr. 120 Account receivable with $3,500

Cr. 110 Cash with $3,500

( deposit in transit )