Part 7 – Internal Control and Cash

Question 7.1 Preparation of Bank Reconciliation and Recording Adjustments

The bank reconciliation prepared by June Bug Inc on June 30, appeared as follows:

June Bug Inc.

Bank Reconciliation
June 30
$ $
Bank Statement Balance 12,351.18 Book Balance 16,874.59
Add:
Deposit of June 30 in
transit 1,208.51
13,559.69
Deduct: Deduct:
Outstanding cheques: NSF cheque plus
$
#265 $ 455.85 service charge: 5,035.75
Bank service
#276 1,400.00 1,855.85 charge 135.00 5,170.75
$ $
Adjusted bank balance 11,703.84 Adjusted book balance 11,703.84

The Cash account in the general ledger appeared as follows on July 31:

Cash - Acct No 1001

Date Explanation PR Debit Credit Balance
July 1 Balance $11,703.84
$ 10,433.96
1 Cheque # 280 GJ458 1,269.88
1 Cheque # 281 GJ459 1254.32 9,179.64
4 Cheque # 282 GJ460 741.59 8,438.05
6 Cheque # 283 GJ461 455.85 7,982.20
7 Cheque # 284 GJ462 1748.44 6,233.76
8 Deposit GJ463 $ 3,751.56 9,985.32
12 Cheque # 285 GJ464 1375.06 8,610.26
12 Cheque # 286 GJ465 1374.67 7,235.59
14 Cheque # 287 GJ466 647.32 6,588.27
18 Cheque # 288 GJ467 1153.06 5,435.21
19 Deposit GJ468 4,611.27 10,046.48
20 Cheque # 289 GJ469 2386.52 7,659.96
24 Cheque # 290 GJ470 304.05 7,355.91
25 Cheque # 291 GJ471 337.08 7,018.83
31 Deposit GJ472 4,152.36 11,171.19
The following bank statement is available for July:

Financial Accounting I by Evan van Dyk is license under a CC BY 4.0 license.

 Bank Statement
To: June Big Inc.
July 31
Cheques/Charges Deposits/Credits Balance
July 1 Balance $12,351.18
1 Deposit $1,208.51 13,559.69
6 Cheque # 280 $1,269.88 12,289.81
8 Cheque # 282 741.59 11,548.22
8 Cheque # 265 455.85 11,092.37
9 Cheque # 284 1,748.44 9,343.93
9 Deposit 3,751.56 13,095.49
14 Cheque # 286 1,374.67 11,720.82
15 Cheque # 287 674.32 11,046.50
18 Cheque # 285 1,375.06 9,671.44
20 Deposit 4,611.27 14,282.71
23 Cheque # 289 2,386.52 11,896.19
28 Cheque # 291 337.08 11,559.11
31 Interest 4.50 11,563.61
31 Service Charge 60.00 11,503.61

Prepare a bank reconciliation at July 31 Assume that any errors made were by the bookkeeper (cheque
#287 was for office supplies).
Prepare the necessary entries resulting from the bank reconciliation.

Financial Accounting I by Evan van Dyk is license under a CC BY 4.0 license.

Financial Accounting I by Evan van Dyk is license under a CC BY 4.0 license.
 Date Account Titles and Explanation PR Debit Credit

Financial Accounting I by Evan van Dyk is license under a CC BY 4.0 license.

 Question 7.2 Preparation of Bank Reconciliation and Recording Adjustments
The bank reconciliation prepared by Chapman Inc. on September 30 appeared as follows:

Chapman Inc.
Bank Reconciliation
September 30
Bank Statement Balance $ 16,518.15 Book Balance $ 34,648.55
Add:
Deposit of Sept 30 in transit 17,351.00
33,869.15
Deduct: Deduct:
$
Outstanding cheques: Interest Payment 450.00
$
#551 $ 2,945.15 Principle Payment 4,500.00
#558 850.45 3,795.60 Bank service charge 75.00 4,575.00
Adjusted bank balance $ 30,073.55 Adjusted book balance $ 30,073.55

The Cash account in the general ledger appeared as follows on October 31:

Cash - Acct No 1001

Date Explanation PR Debit Credit Balance
October 1 Balance $30,073.55
1 Cheque # 565 GJ121 $ 1,235.26 28,838.29
2 Cheque # 566 GJ122 850.07 27,988.22
3 Cheque # 567 GJ123 1,354.71 26,633.51
6 Cheque # 568 GJ124 858.71 25,774.80
6 Cheque # 569 GJ125 1,253.92 24,520.88
8 Deposit GJ126 3,193.93 27,714.81
12 Cheque # 570 GJ127 810.37 26,904.44
12 Cheque # 571 GJ128 1,458.10 25,446.34
14 Cheque # 572 GJ129 816.54 24,629.79
18 Cheque # 573 GJ130 1,014.34 23,615.45
19 Deposit GJ131 1,139.68 24,755.13
20 Cheque # 574 GJ132 2,386.52 22,368.62
24 Cheque # 575 GJ133 780.85 21,587.77
25 Cheque # 576 GJ134 925.60 20,662.16
31 Deposit GJ135 1,264.08 21,926.25

The following bank statement is available for October:

Financial Accounting I by Evan van Dyk is license under a CC BY 4.0 license.

 Bank Statement
To: Chapman Inc.
October 31
Cheques/Charges Deposits/Credits Balance
October 1 Balance $16,518.15
1 Deposit $17,351.00 33,869.15
3 Cheque # 551 $2,945.15 30,924.00
8 Cheque # 565 1,235.26 29,688.74
8 Cheque # 568 858.71 28,830.03
9 Cheque # 569 1,253.92 27,576.11
9 Deposit 3,193.93 30,770.04
17 Cheque # 572 816.54 29,953.50
19 Cheque # 558 850.45 29,103.05
21 NSF Cheque 1,284.83 27,818.22
20 Deposit 1,139.68 28,957.90
26 Cheque # 574 2,386.52 26,571.38
28 Cheque # 575 780.85 25,790.53
31 Cheque # 571 1,458.10 24,332.43
31 Principle 4,500.00 19,832.43
31 Interest 440.00 19,392.43
31 Service Charge 60.00 19,332.43

Prepare a bank reconciliation at October 31. The NSF cheque was for a customer payment Jessica
Pearson.
Prepare the necessary entries resulting from the bank reconciliation.

Financial Accounting I by Evan van Dyk is license under a CC BY 4.0 license.

Financial Accounting I by Evan van Dyk is license under a CC BY 4.0 license.
 Date Account Titles and Explanation PR Debit Credit

Financial Accounting I by Evan van Dyk is license under a CC BY 4.0 license.