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On August 31, 2021, Cullumber Company had a cash balance per its books of $26,420. The bank statement on that date showed a balance of $16,780. A comparison of the bank statement with the Cash account revealed the following.

1.The August 31 deposit of $17,220 was not included on the August bank statement.
2.The bank statement shows that Cullumber received EFT deposits from customers on account totalling $2,050 in August. Cullumber has not recorded any of these amounts.
3.Cheque #673 for $1,230 was outstanding on July 31. It did not clear the bank account in August. All of the cheques written in August have cleared the bank by August 31, except for cheque #710 for $2,330, and #712 for $2,220.
4.The bank statement showed on August 29 an NSF charge of $187 for a cheque issued by R. Dubai, a customer, in payment of their account. This amount included an $10 service charge by Cullumber’s bank. The company’s policy is to pass on all NSF service charges to the customer.
5.Bank service charges of $27 were included on the August statement.
6.The bank recorded cheque #705 for $137 as $173. The cheque had been issued to pay for freight out on a sale. Cullumber had correctly recorded the cheque.

Prepare a bank reconciliation at August 31

Prepare the necessary adjusting entries on August 31.

Sagot :

anthougo

a) The preparation of the bank reconciliation statement on August 31 for Cullumber Company is as follows:

Bank Reconciliation Statement

Balance as per bank statement            $16,780

Add uncredited deposits of 17,220

       Check #705 overstated                         36

Less uncashed checks                            (5,780)

Adjusted bank statement balance of $28,256

b) The preparation of the necessary adjusting entries on August 31 is as follows:

Debit Cash $2,050

Credit Accounts Receivable (EFT deposits) $2,050

Debit Accounts Receivable (R. Dubai) $197

Credit NSF charges $187

Credit Service charges $10

Debit Bank service charges $27

Credit Cash $27

What is bank reconciliation?

Bank reconciliation is the comparison of an entity's records with those of its bank, to uncover any differences between these two sets of records of bank transactions.

Bank reconciliation is carried out by the preparation of a bank reconciliation statement, which outlines the deposits, withdrawals, and other activities affecting a bank account for a specific period.

Data and Calculations:

Cash balance per books on August 31, 2021 = $26,420

Bank statement balance = $16,780

Analysis of Discrepancies:

1. Uncredited deposit = $17,220

2. EFT deposits = $2,050

3. Outstanding checks:
Check #673 = $1,230

Check #710 = $2,330

Check #712 = $2,220

Total outstanding checks = $5,780 ($1,230 + $2,330 + $2,220)

4. NSF charge = $187

Service charge = $10

5. Bank service charges = $27

6. Check #705 overstated = $36 ($173 - $137)

Adjusted Cash Account:

Balance as per Cash Book        $26,420

EFT deposits                                $2,050

Less:

NSF charge                 187

Bank service charges 27                (214)

Adjusted cash book balance $28,256

Learn more about bank reconciliation statements at https://brainly.com/question/15525383

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