The cash data of Big City Automotive for July 2014 follow:

Big City Automotive received the following bank statement on July 31, 2014:

Additional data for the bank reconciliation include the following:
a. The EFT deposit was a receipt of monthly rent. The EFT debit was a monthly insurance expense.
b. The unauthorized signature check was received from a customer and returned by the bank unpaid.
c. The correct amount of check number 3115, a payment on account, is $1,390. (Big City Automotive’s accountant mistakenly recorded the check as $1,930.)
d. Te bank collected a note receivable for Big City Automotive.

Requirements
1. Prepare the Big City Automotive bank reconciliation at July 31, 2014.
2. Prepare the necessary journal entries at July 31, 2014.
3. Describe how a bank account and the bank reconciliation help the general manager control Big City Automotives’cash.

Transcribed Image Text:

Account No. 101 Jrnl. Ref. Debit Credit Balance July 1 Balancc CR 6 CP 11 7,750 17,951 6,958 10,201 4 10,993 Cash Receipts (CR) Cash Payments (CP) Cash Debit Cash Credit July 2 $ 1,506 0 Total $10,993 A1 Bank Statement for July 2014 S 7,750 Beginning balance 3 Deposits and other additions S 850 EFT 2,875 586 Juy 1 9 12 17 1,695 845 413 23 8,614 Checks and other deductions $1,506 1,390 13 14 417 US 1,838 95 18 21 26 30 30 17 407 EFT 819 174 19 20 1 Ending balance 9,693 2 Explanation: BC- bank collection of note Treceivahle from customer, EFT electronic funds transfes, Us umauthorized signature, SC service charge