Response to the following problem:
The reconciliation of the cash balance per bank statement with the balance in the Cash account in the general ledger usually results in one of five types of adjustments. These are
a. Additions to the reported general ledger cash balance
b. Deductions from the reported general ledger cash balance
c. Additions to the reported cash balance per the bank statement
d. Deductions from the reported cash balance per the bank statement
e. Information that has no effect on the current reconciliation.
Required:
1. Using the above letters a to e from the list, indicate the appropriate adjustment for each of the following items that apply to Goertzen Ltd. for December, 2015:
The company has received a $3,000 loan from the bank that was deposited into its bank account but was not recorded in the company records.
A $250 cheque was not returned with the bank statement though it was paid by the bank. _____ _____ Cheques amounting to $4,290 shown as outstanding on the November reconciliation still have not been returned by the bank.
A collection of a note receivable for $1,000 made by the bank has not been previously reported to Goertzen. This includes interest earned of $50.
The bank has erroneously charged Goertzen with a $1,100 cheque, which should have been charged to Gagetown Ltd.
A $350 cheque made out by Fynn Company and deposited by Goertzen has been returned by the bank marked NSF; this is the first knowledge Goertzen has of this action.
A cheque for $840 was erroneously recorded as $730 in the company records.
A $600 bank deposit of December 31 does not appear on the bank statement. Bank service charges amounting to $75 were deducted from the bank statement but not yet from the company records.
2. Prepare a bank reconciliation using the data given above. On December 31, the Cash account in the general ledger of Goertzen Ltd. showed a balance of $84,293. The bank statement showed a balance of $90,568.
3. Prepare journal entries required to adjust the general ledger Cash account of Goertzen Ltd. to the reconciled balance.