Problem 7-9A Preparing a bank reconciliation and recording adjustments LO6

Stewart Recording Studio, owned by Ron Stewart, showed the following bank reconciliation at March 31:

Stewart Recording Studio
Bank Reconciliation
March 31, 2020
Bank statement balance				$	23,100	Book balance	$	32,345
Add:
Deposit of March 31 in transit					10,450
				$	33,550
Deduct:
Outstanding cheques:
#14	$	870
#22		335			1,205
Adjusted bank balance				$	32,345	Adjusted book balance	$	32,345

Cash								Acct. No. 101
Date			Explanation	PR	Debit		Credit	Balance
2020
March	31		Balance					32,345
April	30			CR17	74,660			107,005
	30			CD13			99,452	7,553

A list of deposits made and cheques written during April, taken from the Cash Receipts Journal and Cash Disbursements Journal, is shown below:

Deposits Made
April	7		$	720
	13			4,800
	18			6,160
	23			14,510
	27			1,830
	30			46,640
Total April Cash Receipts			$	74,660

Cheques Written
No.	23		$	5,430
	24			3,290
	25			980
	26			340
	27			4,640
	28			4,900
	29			21,510
	30			45,400
	31			452
	32			12,510
Total April Cash Disbursements			$	99,452

The following bank statement is available for April:

Bank Statement
To: Stewart Recording Studio						April 30, 2020 Bank of Canada
Cheques/Charges						Deposits/Credits			Balance
									23,100
#31	04/03		452			04/03	10,450		33,098
#28	04/07		9,400			04/07	720		24,418
#26	04/13		340			04/13	4,800		28,878
NSF	04/18		15,570			04/18	6,160		19,468
#24	04/23		3,290			04/23	14,510		30,688
#23	04/27		5,430			04/27	1,830		27,088
#29	04/30		21,510			04/30	130,000		135,578
PMT	04/30		17,420						118,158
INT	04/30		930						117,228
SC	04/30		195						117,033
NSF = Not Sufficient Funds		SC = Service Charge				PMT = Payment of Principal on the loan			INT = Interest on Bank Loan

• In reviewing cheques returned by the bank, the bookkeeper discovered that cheque #28, for delivery expense, was recorded in the Cash Disbursements Journal correctly as $4,900.
• The NSF cheque for $15,570 was that of customer Oprah Winney, deposited in March.
• On the bank statement, the payment for $17,420 is regarding a note payable.
• There is also a deposit of $130,000 dated April 30. It is an investment made by the owner into the business (the bank transferred the funds electronically from the owners personal account to his business account, which is why it was not recorded in the Cash Receipts Journal).

Required: a. Prepare a bank reconciliation for Stewart Recording Studio at April 30.

b. Prepare the necessary journal entries to bring the General Ledger Cash account into agreement with the adjusted balance on the bank reconciliation.

• 1

  Record to reinstate customer account.

• 2

  Record the April bank service charges.

• 3

  Record the April interest expense.

• 4

  Record the April payment on note.

• 5

  Record the investment by owner.

• Note : = journal entry has been entered

Journal entry worksheet

• Record to reinstate customer account.

Note: Enter debits before credits.

Date	General Journal	Debit	Credit
Apr 30