The cash transactions and cash balances of Banner, Inc. for July were as follows:
1. The ledger account for Cash showed a balance at July 31 of $125,568.
2. The July bank statement showed a closing balance of $114,828.
3. The cash received on July 31 amounted to $16,000. It was left at the bank in thenight depository chute after banking hours on July 31 and therefore was notrecorded by the bank on the July statement.
4. Also included with the July bank statement was a debit memorandum from thebank for $50 representing service charges for July.
5. A credit memorandum enclosed with the July bank statement indicated that a noninterest bearing note receivable for $4,000 from Rene Manes, left with the bankfor collection, had been collected and the proceeds credited to the account ofBanner, Inc.
6. Comparison of the paid checks returned by the bank with the entries in theaccounting records revealed that check no. 821 for $519, issued July 15 inpayment for office equipment, had been erroneously entered in Banner’s recordsas $915.
7. Examination of the paid checks also revealed that three checks, all issued in July,had not yet been paid by the bank: no. 811 for $314; no.814 for $625; no. 823 for$175.
8. Included with the July bank statement was a $200 check drawn by HowardWilliams, a customer of Banner, Inc. This check was marked “NSF”. It had beenincluded in the deposit of July 27 but had been charged back against thecompany’s account on July 31.
Instructions:
a. Prepare a bank reconciliation for Banner, Inc. at July 31.
b. Prepare journal entries (in general journal form) to adjust the accounts atJuly 31. Assume that the accounts have not been closed.
c. State the amount of cash that should be included in the balance sheet atJuly 31.
d. Explain why the balance per the company’s bank statement is often largerthan the balance shown in it’s accounting records.
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