Reference no: EM132672362
Winwin Ltd (Winwin) prepares monthly bank reconciliations of its checking account balance. Its bank statement for the month of March 2019 indicated the following:
Balance, 31 March 2019 $20,200
The balance was determined after taking into account the following items:
Service charge 50
Interest earned 80
Non-Sufficient Funds cheque from Winwin's customer 250
Note ($4,000) and interest ($40) collected by the bank from a customer of Winwin 4040
An analysis of Winwin's cash book for the month of March 2019 revealed the following items:
Cash at bank balance, 31 March 2019 $16,720
Outstanding cheques 1,850
Deposit in transit 2,100
There was an error in recording the cheque # 1313 issued by Winwin as payment for merchandise purchases. The amount written in the cheque # 1313 was correctly stated at $760 and cleared by the bank. However, it was incorrectly recorded as a cash disbursement of $670 by the company in its books.
Required
Problem (i) Based on the above information, prepare one bank reconciliation schedule for Winwin at 31 March 2019.
Problem (ii) Prepare the necessary adjusting journal entries.
Problem (iii) Explain how checking accounts, bank statement, and bank reconciliation are used by Winwin to control its cash.