Question: Bug Busters Company performs insect extermination services On October 31

Bug Busters Company performs insect extermination services. On October 31, 2014, the company’s cash account per its general ledger showed a balance of $4,632. The bank statement from Central Bank on that date showed the following balance.

A comparison of the details on the bank statement with the details in the cash account revealed the following facts.
1. The statement included a debit memo of $50 for the printing of additional company checks.
2. Cash sales of $342 on October 6 were deposited in the bank. The cash receipts journal entry and the deposit slip were incorrectly made for $372. The bank credited Bug Busters Company for the correct amount.
3. Outstanding checks at October 31 totaled $1,250, and deposits in transit were $2,390.
4. On October 13, the company issued check No. 4263 for $196 to T. Grey, on account. The check, which cleared the bank in May, was incorrectly journalized and posted by Bug Busters Company for $169.
5. A $1,000 note receivable was collected by the bank for Bug Busters Company on October 31 plus $50 interest. The bank charged a collection fee of $15. No interest has been accrued on the note.
6. Included with the canceled checks was a check issued by Fig Leaf Company for $120 that was incorrectly charged to Bug Busters Company by the bank.
7. On October 31, the bank statement showed an NSF charge of $230 for a check issued by Jon Simpson, a customer, to Bug Busters Company on account.

(a) Prepare the bank reconciliation at October 31, 2014.
(b) Prepare the necessary adjusting entries for Bug Busters Company at October 31,2014.
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  • CreatedApril 07, 2014
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