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2 December, 09:57

The following information pertains to Crane Video Company:

1. Cash balance per bank, July 31, $7,263.

2. July bank service charge not recorded by the depositor $28.

3. Cash balance per books, July 31, $7,284.

4. Deposits in transit, July 31, $1,300.

5. Bank collected $700 note for Crane in July, plus interest $36, less fee $20. The collection has not been recorded by Crane, and no interest has been accrued.

6. Outstanding checks, July 31, $591.

A. Prepare a bank reconciliation at July 31.

B. Journalize the adjusting entries at July 31 on the books of Crane Video Company.

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Answers (1)
  1. 2 December, 10:26
    0
    Prepare Bank Reconciliation Statement

    Balance at Bank as per Cash Book - Up to date $7,972

    Less Lodgements not yet credited : ($1,300)

    Add Unpresented Cheques $591

    Balance as per Bank Statement $7,263

    Adjusting Entries

    J1

    Bank service charge $28 (debit)

    Cash $28 (credit)

    J2

    Cash $700 (debit)

    Note - Receivable Crane $700 (credit)

    J3

    Cash $36 (debit)

    Interest Income $36 (credit)

    J4

    Service Fee $20 (debit)

    Cash $20 (credit)

    Explanation:

    First Update the Cash Book as follows:

    Debit:

    Cash balance $7,284

    Crane $700

    Interest $36

    Totals $8,020

    Credit:

    Bank service charge $28

    Crane : fee $20

    Balance - Up to date $7,972

    Totals $8,020

    Then, Prepare Bank Reconciliation Statement

    Balance at Bank as per Cash Book - Up to date $7,972

    Less Lodgements not yet credited : ($1,300)

    Add Unpresented Cheques $591

    Balance as per Bank Statement $7,263

    Adjusting Entries

    J1

    Bank service charge $28 (debit)

    Cash $28 (credit)

    J2

    Cash $700 (debit)

    Note - Receivable Crane $700 (credit)

    J3

    Cash $36 (debit)

    Interest Income $36 (credit)

    J4

    Service Fee $20 (debit)

    Cash $20 (credit)
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