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    Bank reconciliation statement & Journal entries

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    The Agricultural Genetics Company's Cash account is in general ledger reported a balance of $9,448 on May 31, 2008. The company's bank statement from Western Bank reported a balance of $11,689 on the same date.

    A comparison of the details in the bank statement to the details in the Cash account revealed the following facts:

    1. The bank statement included a debit memo of $50 for bank service charges
    2. Cash sales of $638 on May 12 were deposited in the bank. The journal entry to record the cash sales and the deposit slip to the cash were correctly made out for $638. The bank credited Agricultural Genetics Company for $386.
    3. The April 30 deposit of $2,190 was included on the May bank statement. The deposit had been placed in the bank's night deposit vault on April 30.
    4. The May 31 deposit of $1,141 was not included on the May bank statement. The deposit had been placed in the bank's night deposit vault on May 31.
    5. Cheques #928 for $233 and #1014 for $689 were outstanding on April 30. Of these, #1014 cleared the bank in May. All of the cheques written in May except for #1127 for $732, #1195 for $813, and #1196 for $401 had cleared the bank by May 31.
    6. On May 18, the company issued cheque #1151 for $585 to L.Kingston, on account. The cheque, which cleared the bank in May, was incorrectly journalized and posted by Agricultural Genetics Company for $855.
    7. On May 28, the company issued cheque #1192 for $1,738 to Bow Graphics for computer equipment. The cheque was incorrectly recorded by Agricultural Genetics as $1,387. The cheque cleared the bank on May 30.
    8. A review of the bank statement revealed that Agricultural Genetics Company received $2,382 of electronic payments from customers on account in May. The bank had also credited the company's account with $24 of interest revenue on May 31. Agricultural Genetics Company had no previous notice of these amounts.
    9. On May 31, the bank statement showed an NSF charge of $820 for a cheque issued by Pete Dell, a customer, to Agricultural Genetics Company on account. This amount included a $15 service charge by the bank.

    Instructions

    (a) Prepare the bank reconciliation at May 31
    (b) Prepare the necessary adjusting entries at May 31

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    https://brainmass.com/business/the-accounting-cycle/bank-reconciliation-statement-journal-entries-216350

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    Solution Summary

    The solution contains the preparation of bank reconciliation statement for reconciling bank balance with the cash balance and also the adjusting journal entries

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