Problem 7-8B Preparing a bank reconciliation and recording adjustments LO6

CHECK FIGURE: 1. Adjusted book balance = $35,201.35 Yardworx reconciled its book balance of Cash with its bank statement balance on April 30 and showed two cheques outstanding at that time, #1771 for $15,463.10 and #1780 for $955.65.

The following information is available for the May 31, 2020, reconciliation: From the May 31, 2020, bank statement: Balance of previous statement on Apr. 30/20 ............................ $61,045.95 5 deposits and other credits totalling ........................................ 26,088.10 9 cheques and other debits totalling ......................................... 57,005.40 Current balance as of this statement ............................................. 30,128.65 Chequing Account Transactions Transaction Transaction Date Amount Description Date Amount Description May 04 14,662.30 +Deposit May 25 5,200.00 +Credit memo 14 849.25 +Deposit 26 4,210.10 +Deposit 18 15,600.40 NSF cheque 31 135.00 Service charge 22 1,166.45 +Deposit Date Cheque No. Amount Date Cheque No. Amount May 01 1784 7,600.00 May 26 1785 620.15 02 1783 1,465.80 28 1771 15,463.10 15 1787 2,334.75 29 1788 985.65 16 1782 12,800.55

From Yardworxs accounting records: Cash Acct. No. 101 Date Explanation PR Debit Credit Balance 2020 Apr. 30 Balance 44,627.20 May 31 CR7 29,289.05 73,916.25 31 CD8 28,089.50 45,826.75 Deposits Made May 4 ................................................. $14,662.30 14 ................................................. 849.25 22 ................................................. 1,166.45 26 ................................................. 4,210.10 31 ................................................. 8,400.95 Total May Cash Receipts ................... $29,289.05 Cheques Written No. 1782 ............................................... $12,800.55 1783 ............................................... 1,465.80 1784 ............................................... 7,600.00 1785 ............................................... 620.15 1786 ............................................... 974.35 1787 ............................................... 2,334.75 1788 ............................................... 895.65 1789 ............................................... 1,398.25 Total May Cash Disbursements ....... $28,089.50

Cheque #1788 was correctly written for $985.65 to pay for May utilities; however, the bookkeeper misread the amount and entered it in the accounting records with a debit to Utilities Expense and a credit to Cash as though it were for $895.65. The bank paid and deducted the correct amount.

The NSF cheque was originally received from a customer, Gertie Mayer, in payment of her account. Its return was unrecorded.

The credit memo resulted from a $5,300 electronic fund transfer for the collection of a customer payment. The bank had deducted a $100 bank service charge fee. The collection has not been recorded in the companys books.

Required 1. Prepare a bank reconciliation for Yardworx.

2. Prepare the general journal entries needed to adjust the book balance of Cash to the reconciled balance. Analysis Component: The preceding bank statement discloses two places where the cancelled cheques returned with the bank statement are not numbered sequentially. In other words, some of the prenumbered cheques in the sequence are missing. Several possible situations would explain why the cancelled cheques returned with a bank statement might not be numbered sequentially. Describe three possible reasons that this might occur.