Question 3: (Total 10 marks)

Adnan Shipping Company's bank statement for the month of December showed a balance per bank of $7,000. The company's Cash account in the general ledger had a balance of $5,459 at December 31. Other information is as follows:

(1) Cash receipts for December 31 recorded on the company's books were $5,700 but this amount does not appear on the bank statement.

(2) The bank statement shows a debit memorandum for $40 for check printing charges.

(3) Check No. 119 payable to Lann Company was recorded in the cash payments journal and cleared the bank for $248. A review of the accounts payable subsidiary ledger shows a $36 credit balance in the account of Lann Company and that the payment to them should have been for $284.

(4) The total amount of checks still outstanding at December 31 amounted to $6,000.

(5) Check No. 138 was correctly written and paid by the bank for $409. The cash payment journal reflects an entry for Check No. 138 as a debit to Accounts Payable and a credit to Cash in Bank for $490.

(6) The bank returned an NSF check from a customer for $360.

(7) The bank included a credit memorandum for $1,560 which represents collection of a customer's note by the bank for the company; principal amount of the note was $1,500 and interest was $60. Interest has not been accrued.

Instructions:

Prepare a bank reconciliation for Adnan Shipping Company at December 31.

Answer:

ADNAN SHIPPING COMPANY

Bank Reconciliation

December 31

Cash balance per bank $

Adjusted cash balance per books $