Dion Ltd’s ledger showed a cash balance of $12,134 on December 31. In preparing the bank reconciliation, the following information was determined:
a. EFT collection by bank from a credit customer was $5,620.
b. A deposit of $2,600 was correctly recorded in the books, but it showed as $26.00 on the bank statement.
c. Cheque 205 issued by Dion Ltd. in the amount of $550, for the payment of the bank loan $500 and 10% of interest, had been incorrectly recorded in the books as $55.
d. Cheque 221 issued by Dion Ltd. in the amount of $2,460, for the purchase of a computer, had been incorrectly paid by the bank as $246.
e. A cheque for $521 paid by a customer for his purchase was incorrectly recorded in the books as $125.
f. An NSF cheque for $2,850 was returned with the bank statement, with a bank charge of $15 for this transaction.
g. Cheque #201 issued by Dion Ltd. in the amount of $1,250 was not included in the bank statement.
h. The bank statement showed interest charges and bank service charges were $52 and $28 respectively.
1. Prepare Dion’s bank reconciliation at December 31.
2. What was the reconciled book balance? What was the bank statement balance before reconciliation?
3. Record the entries to update the Cash account balance. Include an explanation for each entry.
4. If the entries were not recorded in (3), what is the impact on each of the assets, liabilities, and shareholders’ equity accounts?