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Chapter 7: Question P7-14 (page 375)

(Bank Reconciliation and Adjusting Entries) Presented below is information related to Haselhof Inc. Balance per books at October 31, \(41,847.85; receipts \)173,523.91; disbursements \(164,893.54. Balance per bank statement November 30, \)56,274.20.

The following checks were outstanding at November 30.

1224

\(1,635.29

1230

2,468.30

1232

2,125.15

1233

482.17

Included with the November bank statement and not recorded by the company were a bank debit memo for \)27.40 covering bank charges for the month, a debit memo for \(372.13 for a customer鈥檚 check returned and marked NSF, and a credit memo for \)1,400 representing bond interest collected by the bank in the name of Haselhof Inc. Cash on hand at November 30 recorded and awaiting deposit amounted to $1,915.40.

Instructions

(a) Prepare a bank reconciliation (to the correct balance) at November 30, for Haselhof Inc. from the information above.

(b) Prepare any journal entries required to adjust the cash account at November 30.

Short Answer

Expert verified

The correct cash balance of the business entity is$51,478.69.

Step by step solution

01

Definition of Outstanding Checks

The checks written by a business entity or individual, but are not presented in the bank by the holder or not cleared by the bank, are covered under outstanding checks.

02

Bank reconciliation statement

Particular

Amount $

Amount $

Balance as per passbook

$56,274.20

Add:

Deposit in transit

1,915.40

Less:

Checks outstanding

1224

$1,635.29

1230

2,468.30

1232

2,125.15

1233

482.17

(6,710.91)

Correct balance of passbook

$51,478.69

Balance as per cashbook$41,847路85+$173,523路91-$164,893路54

$50,478.22

Add:

Interest on bonds

1,400

Less:

Bank charges

(27.40)

NSF checks

(372.13)

Correct cash balance

$51,478.69

03

Journal entries

Date

Accounts and Explanation

Debit $

Credit $

30 Nov

Cash

$1,400

Interest on bonds

$1,400

30 Nov

Bank charges

$27.40

Accounts receivables - NSF checks

$372.13

Cash

$399.53

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