Reference no: EM132875399

Question - FOR CLASSROOM DISCUSSION - Bank reconciliation - Depositor vs. Bank Journal entries

The cash balance per book on June 30, 20x1 is 100,000 equal to the cash balance per bank statement on the same date. The transaction in July 20x1 are summarized below:

a. Collections from customers totaled 500,000. All the collections were deposited however, only 480,000 were credited by the bank to the entity's account as of July 31, 20x1. The difference was due to bank cut off.

b. Checks drawn totaled 200,000 of which 140,000 were encashed during the period.

c. Customers deposited a total of 360,000 to the entity's bank account as payment of accounts receivable. The entity was not yet notified of the collections.

d. The bank debited the entity's account for 40,000 representing payment for mobile phone charges. The entity was not yet notified of the payment.

Requirements -

a. Prepare the journal entries in the books of (1) the entity and (2) the bank, respectively.

b. Compute for the following (1) deposits in transit (2) outstanding checks (3) credit memos (4) debit memo.

c. Prepare the July 31, 20x1 bank reconciliation.

d. Prepare the reconciling entries in the entity's book.