Challenge Exercise 3- Chapter 7

Expands on: E7-11

LO: 3

The following information pertains to Two Guys Video Company.

1. Cash balance per bank, July 31, $7,363.

2. July bank service charge not recorded by the depositor $22.

3. The bank erroneously charged another companys $700 check against Two Guys account.

4. Cash balance per books, July 31, $8,784.

5. The bank charged Two Guys account $350 for a customers NSF check.

6. Deposits in transit, July 31, $2,200.

7. Two Guys recorded a cash receipt from a customer as $32. The bank correctly recorded it at $23.

8. Bank collected a $1,250 note for Two Guys in July, plus interest $36, less fee $20. The collection has not been recorded by Two Guys and no interest has been accrued.

9. Outstanding checks, July 31, $594.

Instructions:

(a) Prepare a bank reconciliation for July 31.

(b) Journalize the adjusting entries for July 31 on the books of Two Guys Video Company.