Ex 8.

12 Prepare bank reconciliation and adjusting entries

The information below relates to the Cash account in the ledger of Minton Company.
Balance September 1 - $17,150, Cash deposited - $64,000.
Balance September 30 - $17,404; Checks written - $63,746.

The September bank statement shows a balance of $16,422 on September 30 and the following memoran
Credits
Collection of $2,500 note plus interest $ $2,530
Interest earned on checking account $45

At September 30, deposits in transit were $5,450 and outstanding checks totaled $2,383.

Instructions:
(a) Prepare the bank reconciliation at September 30
(b) Prepare the adjusting entries at September 30, assuming (1) the NSF check was from a
customer on account, and (2) no interest had been accrued on the note.
NOTE: Enter a number in cells requesting a value; enter either a number or a formula in cells with a "?" .

(a) Prepare the bank reconciliation at September 30

MINTON COMPANY
Bank Reconciliation
30-Sep
Cash balance per bank statement
Add: Deposits in transit

Less: Outstanding checks

Adjusted cash balance per bank

Cash balance per books

Add: Collection of funds
Interest earned on checking account

Less: NSF check

Deposit box rent
Adjusted cash balance per books

(b) Prepare the adjusting entries at September 30, assuming (1) the NSF check was from a
customer on account, and (2) no interest had been accrued on the note.
 30-Sep Collection of Funds
Collection
Interest

30 Cash
Account Receivable

30 Account Receivable
Cash

30 Account Payable
Cash

After you have completed the requirements of E8.12, consider the additional question.
1 Assume deposits in transit changed to $5,000 and NSF check changed to $875. What would be

MINTON COMPANY
Bank Reconciliation
30-Sep
Cash balance per bank statement
Add: Deposits in transit

Less: Outstanding checks

Adjusted cash balance per bank

Cash balance per books

Add: Collection of funds
Interest earned on checking account

Less: NSF check

Deposit box rent
Adjusted cash balance per books
30 and the following memoranda.
Debits
NSF check: Richard Nance $425
Safety deposit box rent $65

taled $2,383.

SF check was from a

a formula in cells with a "?" .

$ 16,422
$ 5,450
21,872
2,383
$ 19,489

$ 17,404
$ 2,530
45 2,575
19,979
425
65 490
$ 19,489

SF check was from a

 2,530
2,500
30

425
425

45
45

65
65

l question.
nged to $875. What would be the impact on adjusted cash balance per bank and books?

$ 16,422
$ 5,000
21,422
2,383
$ 19,039

$ 17,404
$ 2,530
45 2,575
19,979
875
65 940
$ 19,039
E8.11 Prepare bank reconciliation and adjusting entries
The following information pertains to Crane Video Company.
1 Cash balance per bank, July 31, $7,263.
2 July bank service charge not recorded by the depositor $28.
3 Cash balance per books, July 31, $7,284.
4 Deposits in transit, July 31, $1,300.
5 Bank collected $700 note for Crane in July, plus interest $36, less fee $20. The
collection has not been recorded by Crane, and no interest has been accrued.
6 Outstanding checks, July 31, $591.

Instructions
(a) Prepare a bank reconciliation at July 31.
(b) Journalize the adjusting entries at July 31 on the books of Crane Video Company.
NOTE: Enter a number in cells requesting a value; enter either a number or a formula in cells with a "?" .

(a) Prepare a bank reconciliation at July 31.

CRANE VIDEO COMPANY

Bank Reconciliation
31-Jul
Cash balance per bank statement 7,263
Add: Deposit in transit 1,300
8,563
Less: Outstanding Checks 591
Adjusted cash balance per bank 7,972

Cash balance per books 7,284

Add: Collection of electronic funds tranfer 716
8,000
Less: Bank Service Charge 28
Adjusted cash balance per books 7,972

(b) Journalize the adjusting entries at July 31 on the books of Crane Video Company.

31-Jul Cash 716

Fee 20
Interest Revenue
Note Receivable

31 Bank Service Charge 28

Cash
After you have completed the requirements of E8.11, consider these additional questions.
Answers are on the other tab in this file.
1 Assume deposits in transit changed to $1,600. What would be the new adjusted cash balance pe
2 Using the new adjusted cash balance per bank in (1) above, what would the balance per books b

1 Prepare a bank reconciliation at July 31.

CRANE VIDEO COMPANY

Bank Reconciliation
31-Jul
Cash balance per bank statement $ 7,263
Add: Deposit in transit 1,600
8,863
Less: Outstanding Checks 591
Adjusted cash balance per bank $ 8,272

2 Cash balance per books $ 7,284

Add: Collection of funds 716
8,000
Less: Bank service charges 28
Adjusted cash balance per books $ 7,972
 Company.
mula in cells with a "?" .

of Crane Video Company.

36
700

28
questions.

adjusted cash balance per bank?

d the balance per books be before adjustments?
Challenge exercise 1
a. Journal Entries
Date Accounts Title & Explanation Debit Credit
Petty Cash 150
1-May Cash 150
(to establish petty cash fund)
Delivery expense 31.25
Postage expense 39
Miscellaneous expenses 62
1-Jun
Cash over & Short 22.5
Cash 154.75
(to ereplenish petty cash fund)
Delivery expense 31
Entertainment expense 71
1-Jul Miscellaneous expenses 44.75
Cash 146.75
(to replenish petty cash fund)
Petty Cash 50
10-Jul Cash 50
(to increase petty cash limit to $200 )

b. Esstablishment of Responsibility & Documentation Procedure

 Challenge exercise 2

a. Two Guys Video Company

Bank Reconcliation
31-Jul
Cash balance per bank statement 7,363
Add: Deposits in transit 2,200
Bank error 700 2,900
10,263
Less : Outstanding checks 594
Adjusted cash balance per bank 9,669

Cash balance per books 8,784

Add: Collection of note 1,266
10,050
Less : Bank service charge 22
NSF check 350
Bank error 9 381
Adjusted cash balance per books 9,669

b. Journal entries
Date General Journal Debit Credit
Cash 1,266
Miscellaneous expense 20
31-Jul
Notes receivable 1,250
Interest Revenue 36
Miscellaneous expense 22
31-Jul
Cash 22
Account Receivable 350
31-Jul
Cash 350
Rent Revenue 9
31-Jul
Cash 9