QUESTION 1

Gas Ltd's bank statement from AusCom bank as at 31 August shows the following information:

Balance, 1 August $ 34,800

August deposits $ 146,220

Cheques cleared in August $ 139,320

Balance, 31 August $ 51,864

Bank direct credits:

Collection of note receivables plus &180 interest $ 10,180

Interest earned $ 64

Bank direct debits: Safety deposit box rent $ 80

A summary of the record on Cash at bank account for August shows the following:

Balance 1 August $33,800; total cash receipts journal $154,000 and cash payment journal $147,140. Analysis reveals that the only reconciling items on the 31 July bank reconciliation were an outstanding deposit for $8,000 and unpresented cheques of $9,000. The deposit in transit was the first deposit recorded by the bank in August. In addition, you determine that there were two errors involving business cheques drawn in August: First, a cheque for $800 to a creditor on account that cleared the bank in August was journalised and posted for $840. Second, a salary cheque to an employee for $550 was recorded by the bank $556.

Required (show all working):

1. Prepare bank reconciliation for Gas Ltd for August to adjust the bank and book (32 marks) balance.
2. Prepare required journal entries to adjust the book balance. (18 marks)