Ignore GST for this problem. On 31 May 2019, Terrell Ltd, a service company, had a...

 

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Ignore GST for this problem. On 31 May 2019, Terrell Ltd, a service company, had a cash balance per general ledger of $6,781.50. The bank statement from Home Town Bank on that date showed a balance of $6,854.60. Terrell Ltd provides its services, then bills its customers, who have the option of paying by bank transfer (Eftpos), with a visa card, or by cheque. For all customers, Terrell Ltd records a receivable when a customer is billed. Customers paying by visa call Terrell Ltd with their credit card data, and Terrell Ltd then journalises the cash receipt; however, there is a short time delay from the time the event is journalised by Terrell Ltd and the time Terrell Ltd's bank credits Terrell Ltd's account (less a 2% credit card charge). Most suppliers are paid by bank or wire transfer, but a few international suppliers are paid by cheque. A comparison of the bank statement with the Cash general ledger account and supporting data revealed the following facts. 1. The statement showed that the bank balance had been reduced by $60 for miscellaneous charges, including the $20 mentioned in fact #6, and the $10 mentioned in fact #8, below. Terrell Ltd has a "Bank Charges Expense" general ledger account. 2. A customer direct deposit (Eftpos transfer) of $836.15 was incorrectly recorded by Terrell Ltd as $886.15. 3. Outstanding checks at 31 May totalled $276.25. 4. Terrell Ltd had not yet informed the bank of customer visa credit card payments in the amount of $1,955.26. The company had correctly journalised this as a cash receipt less the $39.11 the bank will charge. 5. On 18 May, the company issued a cheque for $685 to Malaysia Travel Ltd for payment on account. The cheque, which cleared the bank in May, was incorrectly journalized and posted by Terrell Ltd for $658. 6. The bank statement disclosed that a $3,000 note receivable was collected by the bank for Terrell Ltd on 31 May, along with $80 of interest. The bank charged a collection fee of $20. As of the end of April, Terrell Ltd had accrued $60 of interest on the note. Terrell Ltd has both an Interest Receivable and an Interest Revenue account in its general ledger. 7. The bank statement disclosed that the bank incorrectly charged Terrell Ltd for a $600 cheque written by Trump Charities. 8. The bank statement showed an NSF charge of $640 for a cheque issued by Sandy Grifton. The cheque was for $630, but the bank charged Terrell Ltd $10 as a penalty. After calling Ms. Grifton, the company agreed to accept a new cheque from her in the amount of $640. Required: a) Prepare Terrell Ltd's journal entries suggested by the above facts. b) Prepare Terrell Ltd's bank reconciliation at 31 May 2017 as discussed in lecture and tutorial. Ignore GST for this problem. On 31 May 2019, Terrell Ltd, a service company, had a cash balance per general ledger of $6,781.50. The bank statement from Home Town Bank on that date showed a balance of $6,854.60. Terrell Ltd provides its services, then bills its customers, who have the option of paying by bank transfer (Eftpos), with a visa card, or by cheque. For all customers, Terrell Ltd records a receivable when a customer is billed. Customers paying by visa call Terrell Ltd with their credit card data, and Terrell Ltd then journalises the cash receipt; however, there is a short time delay from the time the event is journalised by Terrell Ltd and the time Terrell Ltd's bank credits Terrell Ltd's account (less a 2% credit card charge). Most suppliers are paid by bank or wire transfer, but a few international suppliers are paid by cheque. A comparison of the bank statement with the Cash general ledger account and supporting data revealed the following facts. 1. The statement showed that the bank balance had been reduced by $60 for miscellaneous charges, including the $20 mentioned in fact #6, and the $10 mentioned in fact #8, below. Terrell Ltd has a "Bank Charges Expense" general ledger account. 2. A customer direct deposit (Eftpos transfer) of $836.15 was incorrectly recorded by Terrell Ltd as $886.15. 3. Outstanding checks at 31 May totalled $276.25. 4. Terrell Ltd had not yet informed the bank of customer visa credit card payments in the amount of $1,955.26. The company had correctly journalised this as a cash receipt less the $39.11 the bank will charge. 5. On 18 May, the company issued a cheque for $685 to Malaysia Travel Ltd for payment on account. The cheque, which cleared the bank in May, was incorrectly journalized and posted by Terrell Ltd for $658. 6. The bank statement disclosed that a $3,000 note receivable was collected by the bank for Terrell Ltd on 31 May, along with $80 of interest. The bank charged a collection fee of $20. As of the end of April, Terrell Ltd had accrued $60 of interest on the note. Terrell Ltd has both an Interest Receivable and an Interest Revenue account in its general ledger. 7. The bank statement disclosed that the bank incorrectly charged Terrell Ltd for a $600 cheque written by Trump Charities. 8. The bank statement showed an NSF charge of $640 for a cheque issued by Sandy Grifton. The cheque was for $630, but the bank charged Terrell Ltd $10 as a penalty. After calling Ms. Grifton, the company agreed to accept a new cheque from her in the amount of $640. Required: a) Prepare Terrell Ltd's journal entries suggested by the above facts. b) Prepare Terrell Ltd's bank reconciliation at 31 May 2017 as discussed in lecture and tutorial.