Record any required adjustments from the bank reconciliation

Assignment Help Financial Accounting

Reference no: EM132822760

Question - The 31 July 2020 bank statement of Russia Ltd has just arrived from Northpac Bank. To prepare Russia's bank reconciliation, you gather the following data:

a) Russia's Cash account has a balance of $2,900 on 31 July.

b) The bank statement includes two dishonoured cheques from customers: S. Ferns, $400 and L. Russell, $110.

c) The following cheques appear in the cash payments journal of Russia but have not yet been cleared by the bank at 31 July:

Cheque no. Amount

237 $190

288 170

291 520

294 630

d) Russia collects from a few customers by EFT. The July bank statement lists a $1,300 EFT deposit for a collection on account.

e) The bank statement includes two special deposits that Russia hasn't recorded yet: $970 for dividend revenue, and $80 interest revenue which Russia earned on its bank balance during July.

f) The bank statement lists a $30 bank service charge and a $15 excess transaction fee.

g) On 31 July, Russia deposited $350 from a customer, this deposit hasn't yet appeared on the bank statement.

h) The bank statement includes a $1,000 deduction for a cheque drawn by Southwest Freight, a business unrelated to Russia. Russia notified the bank of this error.

i) The 31 July balance on the bank statement is $4,855 Cr.

Required -

1. Record any required adjustments from the bank reconciliation in the Cash at bank account. Total and balance the account.

2. Prepare the bank reconciliation statement for Russia Ltd at 31 July 2020.

3. A manager of a small online business believes that because most of the transactions take place using electronic transfers instead of cash or cheques, the business no longer needs to do a bank reconcilication each month. Explain to the manager why a bank reconciliation is still necessary for the business.

Reference no: EM132822760

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