QS 7-9Bank reconciliationLO6

1.Identify whether each of the following items affects the bank or book side of the reconciliation and indicate if the amount represents an addition or a subtraction:

a.Deposits in transit.

b.Interest on average monthly balance.

c.Credit memos.

d.Bank service charges.

e.Outstandingcheques.

f.Debit memos.

g.NSFcheques.

2.Which of the previous items require a journal entry?

Exercise 7-11Bank reconciliationLO6

CHECK FIGURE:Adjusted book balance = $11,090

KeslerCo. deposits all receipts intact on the day received and makes all payments by cheque. On July 31, 2017, after all posting was completed, its Cash account showed an $11,042 debit balance. However,Kesler'sJuly 31 bank statement showed only $9,860 on deposit in the bank on that day along with the following information.

a.Outstanding cheques, $2,695.

b.Included with the July cancelled cheques returned by the bank was a $42 debit memo for bank services.

c.Cheque #919, returned with the cancelled cheques, was correctly drawn for $892 in payment of the utility bill and was paid by the bank on July 15. However, it had been recorded with a debit to Utilities Expense and a credit to Cash as though it were for $982.

d.The July 31 cash receipts, $3,925, were placed in the bank's night depository after banking hours on that date and were unrecorded by the bank at the time the July bank statement was prepared.

Required

a. Make a bank reconciliation forKeslerCo. at July 31.

b.Give the journal entries thatKeslerCo. should make as a result of having prepared the bank reconciliation in part (a).

Analysis Component:Identify whether profit, assets, liabilities, and equity would be over- or understated if the journalentiresin part (b) were not recorded

Bank Reconciliation

July 31,2017

Bank statement balanceBook balance of cash$

Add:Add:

Outstanding depositError on Ch. No. 919

$

Deduct:Deduct:

Outstanding chequesBank service charge

Adjusted bank balance$Adjusted book balance$