The following information was available to reconcile Montrose Company's book balance of Cash with its bank statement balance as of October 31, 2014:
a. After all posting was completed on October 31, the company's Cash account had a $13,254 debit balance, but its bank statement showed a $29,436 balance.
b. Cheques #296 for $1,340 and #307 for $12,809 were outstanding on the September 30 bank reconciliation. Cheque #307 was returned with the October cancelled cheques, but cheque #296 was not. It was also found that cheque #315 for $897 and cheque #321 for $2,010, both written in October, were not among the cancelled cheques returned with the statement.
c. In comparing the cancelled cheques returned by the bank with the entries in the accounting records, it was found that cheque #320 for the October rent was correctly written for $3,070 but was erroneously entered in the accounting records as $3,700.
d. A credit memorandum enclosed with the bank statement indicated that the bank had collected a $22,000 non-interest-bearing note for Montrose, deducted a $120 collection fee, and credited the remainder to the account. This transaction was not recorded by Montrose before receiving the statement.
e. A debit memorandum for $3,250 listed a $3,200 NSF cheque plus a $50 NSF charge. The cheque had been received from a customer, Jefferson Tyler. Montrose had not recorded this bounced cheque before receiving the statement.
f. Also enclosed with the statement was a $75 debit memorandum for bank services. It had not been recorded because no previous notification had been received.
g. The October 31 cash receipts, $7,250, were placed in the bank's night depository after banking hours on that date and this amount did not appear on the bank statement.
Required
1. Prepare bank reconciliation for the company as of October 31, 2014.
2. Prepare the General Journal entries necessary to bring the company's book balance of Cash into agreement with the reconciled balance.
Analysis Component: Assume that October 31, 2014, bank reconciliation for the company has already been prepared and some of the items were treated incorrectly in preparing the reconciliation. For each of the following errors, explain the effect of the error on: (1) the final balance that was calculated by adjusting the bank statement balance and (2) the final balance that was calculated by adjusting the Cash account balance.
a. The company's Cash account balance of $13,254 was listed on the reconciliation as $12,354.
b. The bank's collection of a $22,000 note less the $120 collection fee was added to the bank statement balance.