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The cash transactions and cash balances of Banner, Inc. for July were as follows: - The ledger account for Cash showed a balance at July 31 of $125,568.
- The July bank statement showed a closing balance of $114,828.
- The cash received on July 31 amounted to $16,000. It was left at the bank in the night depository chute after banking hours on July 31 and therefore was not recorded by the bank on the July statement.
- Also included with the July bank statement was a debit memorandum from the bank for $50 representing service charges for July.
- A credit memorandum enclosed with the July bank statement indicated that a non-interest bearing note receivable for $4,000 from Rene Manes, left with the bank for collection, had been collected and the proceeds credited to the account of Banner, Inc.
- Comparison of the paid checks returned by the bank with the entries in the accounting records revealed that check no. 821 for $519, issued July 15 in payment for office equipment, had been erroneously entered in Banner s records as $915.
- 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.
- Included with the July bank statement was a $200 check drawn by Howard Williams, a customer of Banner, Inc. This check was marked NSF . It had been included in the deposit of July 27 but had been charged back against the company s account on July 31.
Instructions: - Prepare a bank reconciliation for Banner, Inc. at July 31.
- Prepare journal entries (in general journal form) to adjust the accounts at July 31. Assume that the accounts have not been closed.
- State the amount of cash that should be included in the balance sheet at July 31.
- Explain why the balance per the company s bank statement is often larger than the balance shown in it s accounting records.
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