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Question no. 2 Question no. 2 P7-5B On May 31, O'Hearn Limited had a cash balance per books of $13,400. The bank statement from Community

Question no. 2

Question no. 2

P7-5B On May 31, O'Hearn Limited had a cash balance per books of $13,400. The bank statement from Community Bank on that date showed a balance of $15,230. A comparison of the bank statement with the company's Cash account revealed the following:

  1. The bank statement included a bank service charge of $80.
  2. The bank statement included two electronic collections from customers on account: $4,110 received from C. Campbell and $78 received from R. Pokoj. These were not previously recorded.
  3. Cash sales of $1,672 on May 12 were deposited in the bank. The journal entry and the deposit slip were incorrectly made out and recorded by O'Hearn for $1,712. The bank detected the error and credited O'Hearn for the correct amount.
  4. Outstanding cheques at April 30 totalled $2,900. Of these, $2,240 worth cleared the bank in May. There were $1,892 of cheques written in May that were still outstanding on May 31.
  5. On May 18, the company issued cheque # 1181 for $1,370 to a creditor in payment of its account. The cheque, which cleared the bank in May, was incorrectly journalized and posted by O'Hearn as being for $1,136.
  6. Included with the cancelled cheques was a cheque issued by O'Bearne Inc. for $1,200 that was incorrectly charged to O'Hearne by the bank.
  7. On May 31, the bank statement showed a returned (NSF) cheque for $1,350 issued by a customer in payment of its account. In addition, the bank charged an $80 processing fee for this transaction.
  8. The May 31 deposit of $1,926 was not included in the deposits on the May bank statement. The deposit had been placed in the bank's night deposit vault on May 31.

Instructions

  1. Prepare the bank reconciliation on May 31.

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