The cash receipts and the cash payments of Ace Hardware for January 2023 are as follows:

The Cash account of Ace Hardware shows a balance of $39,478 at January 31, 2023.

Ace Hardware received the following bank statement on January 31, 2023:

Additional data for the bank reconciliation:

a. The EFT deposit was a receipt of monthly rent from a tenant who lives upstairs. The EFT debit was payment of monthly insurance.

b. The NSF cheque was received from A. Levine.

c. The $12,744 bank collection of a note receivable on January 22 included $200 interest revenue.

d. The correct amount of cheque number 313, a payment on account, is $12,436. (Ace Hardware’s accountant mistakenly recorded the cheque for $12,562.)

Required

1. Prepare the Ace Hardware bank reconciliation at January 31, 2023.

2. Describe how a bank account and the bank reconciliation help Ace Hardware’s owner control the business’s cash.

3. How would you handle items that were outstanding (bank side) from the previous month’s bank reconciliation?

Transcribed Image Text:

Date Jan. 3 8 10 16 22 29 31 Total Cash Receipts Cash Debit $20,988 1,480 1,980 7,788 20,736 2,404 1,428 $56,804 Cash Payments Cheque No. 311 312 313 314 315 316 317 318 319 320 Total Cash Credit $ 3,672 1,668 12,562 2,584 8,588 3,900 1,304 6,268 800 12,664 $54,010