ACCT 1005 _ Cash & Accounts Receivable

Preparation of the
Bank Reconciliation Statement

1. Identify items that are shown only in the books of the

business.

2. Identify items that appear only on the bank

statement of the business
3. Adjust the bank balance using the items that appear
only in the cash book
 Deposits in Transit/Outstanding Deposits (+)
 Outstanding/Unpresented Cheques (-)
& Bank Errors (+ or -) 1

4. Adjust the book balance using the items that

appear only on the bank statement
 Bank Collections/Direct Credit (+)
 EFTs (+ or -)
Difference in signature
 Bank Charges/Fees (-) Missing signature/Missing date
Stale/Post dated
 Interest Earned (+) Difference in words & figure
Insufficient funds (hot, bad, rubber, bounced)
 Dishonoured Cheques (-)
& Book Errors (+ or -)
5. The adjusted bank balance should be equal
to the adjusted cash book balance.

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ACCT 1005 _ Cash & Accounts Receivable

After preparing the bank reconciliation statement:

 Update the accounting records with the

transactions that are on the Company’s Book
side of the bank reconciliation statement

 Correct all book errors & notify the bank of any

error(s) made.

Lecture Questions #1& 2

REMEDIAL MEDICAL COMPANY

Bank Reconciliation
April 30
Balance per bank, April 30 $23,775
Add: Deposit in Transit 3,580
Bank Error 2,970 6,550
30,325
Less: Outstanding Cheques (7,840)
Adjusted bank balance, April 30 $22,485
4

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Bank Reconciliation Cont’d

Balance per books, April 30 $18,885

Add: Bank Collection - Note Receivable & Interest 3,780
22,665
Less: Book Error 70
Bank Service Charges 110 (180)
Adjusted book balance, April 30 $22,485

REMEDIAL MEDICAL COMPANY

General Journal Entries
Date Accounts & Explanation Dr $ Cr $
April 30 Cash 3,780
Notes Receivable 3,600
Interest Revenue 180
Collection of Note with Interest

April 30 Accounts Payable - Copelin Co. 70

Cash 70
Correction of Error
April 30 Miscellaneous Expenses 110
Cash 110
Bank Service Charges 6

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ACCT 1005 _ Cash & Accounts Receivable

BANNER Inc
Bank Reconciliation
July 31
Balance per bank, July 31 $114,828
Add: Outstanding Deposit 16,000
130,828
Less: Un-presented Cheques:
#811 314
#814 625
#823 175 (1,114)
Adjusted bank balance, July 31 $129,714
7

Bank Reconciliation Cont’d

Balance per Cash Book, July 31 $125,568

Add: Note Receivable – R. Mane 4,000
Error (Cheque #821) 396 4,396
129,964
Less: Service Charges 50
Dis. Cheque- H. Williams 200 ( 250)
Adjusted book balance, July 31 $ 129,714

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ACCT 1005 _ Cash & Accounts Receivable

BANNER Inc
General Journal Entries
Date Accounts & Explanation Dr $ Cr $
July 31 Cash 4,000
Notes Receivable – R. Mane 4,000
Note collected by bank
July 31 Cash 396
Office Equipment 396
Correction of error – Cheque #821
July 31 Miscellaneous Expenses 50
Cash 50
Bank service charges
July 31 A/Cs Receivable – H. Williams 200
Cash 200
NSF cheque returned by bank 9

Worksheet #3
Lecture Question 3
Texas Golf Carts

Prepared by Joan Thomas-Stone

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ACCT 1005 _ Cash & Accounts Receivable

TEXAS GOLF CARTS

General Journal
Date Accounts & Explanations Dr ($) Cr ($)
Aug.9 Allowance For Bad-Debts A/C 1,000
A/Cs Receivable: J. Aguilar 200
Seaton Co 100
T. Taylor 700
To write-off uncollectible accounts
Sept.30 Bad-Debt Expense A/C 2,100
Allowance For Bad-Debts A/C 2,100
To record bad debt expense
Oct. 18 Allowance For Bad-Debts A/C 900
A/Cs Receivable: Lantz Co 500
Navisor Corp 400
To write-off uncollectible accounts
Dec. 31 Bad-Debt Expense A/C 300
Allowance For Bad-Debts A/C 300
To record increase in allowance

Aging of Receivables
Age Interval Balance Est. Est.
Uncollectible Uncollectible
% Amount
1-30 days 100,000 0.1 100

31-60 days 40,000 0.5 200

61-90 days 14,000 5.0 700

Over 90 days 9,000 30 2,700

Total 163,000 3,700

Accounts Receivable Estimated Uncollectible AR

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Allowance For Bad-Debts A/C

A/Cs Rec. - J. Aguilar 200 Bal. $3,200
- Seaton Co 100
- T. Taylor 700
Bal. $2,200
Bad-Debt Expense 2,100
A/Cs Rec. - Lantz Co 500 Bal. $4,300
- Navisor Corp 400

Bal. $3,400
Bad-Debt Expense 300
Bal. $3,700

Reporting Receivables on
Balance Sheet
Balance Sheet Extract
Current Assets
Cash & Cash Equivalents xxxxx
Accounts Receivable $163,000
Less: Allowance For Bad-Debts ( 3,700)
Net Receivables $159,300

OR
A/Cs Receivable, net of Allowance for BDS of $3,700 $159,300

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