Problem: The following information is available for Trex Co.:
a) Balance per the bank staement dated March 31, 2007, is $32,950.
b) Balance of the Cash account on the company books as of March 31, 2007 is $31,396
c) Included with the bank statement was a $35 credit memorandum for the interest earned on the bank account during the month.
d) Bank deposit of March 31, 2007, for $1,300 does not appear on the bank statement.
e) Bank service charges for the month amount to $30.
f) Cheque#824, for office supplies in the amount of $697, was recorded incorrectly in the Cash Disbursements Journal as $796.
g) Cheques written that had not cleared the bank by March 31, 2007, were the following:
1. #835: $1,200
2. #848: $950
3. #836: $950
h) Included with the bank statement was an NSF cheque for $650 that had been received from a customer in payment of his account.
i) The bank had collected a $300 note on behalf of Trex Co.
Required:
a. Prepare the bank reconciliation at March 31,2007.
b. Prepare any adjusting journal entries relating to this bank reconciliation.
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Account Titles and Explanation |
Debit |
Credit |
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c. Identify 2 reasons why bank reconciliations must be prepared regularly?