CHAPTER 7 Internal Control and Cashi Finall Problem 7-8A Preparing a bank reconciliation and recording adjustments LO6 CHECK FIGURE: 1. Adjusted book balance, $4,871.89 Pelzer Company reconciled its bank and book statement balances of Cash on August 31 and showed two cheques outstanding at that time, #5888 for $6,220.00 and #5893 for $1,485.65. The following information was available for the September 30, 2020, reconciliation: From the September 30, 2020, bank statement: Balance of previous statement on Aug. 31/20 10,674.50 6 deposits and other credits totalling. 9 cheques and other debits totalling. Current balance as of Sept. 30/20 Chequing Account Transactions 22,417.05 26,296.05 6,795 50 Transaction Ponsaction Date Amount Description Date Amount Sept. 05 5,643.20 +Deposit Sept. 25 4,230.60 Description +Deposit 12 2,561.45 +Deposit 30 45.00 Interest . CHAPTER 7 Internal Control and Cash Cheque #5904 was correctly written for $9,340.55 to pay for computer equipment; however, the bookkeeper misread the amount and entered it in the accounting records with a debit to Computer Equipment and a credit to Cash as though it were for $3,940.55. The NSF cheque was originally received from a customer, Lisa Willis, in payment of her account. Its return was not recorded when the bank first notified the company. The credit memo resulted from an electronic fund transfer of $3,550 for a customer payment. The bank had deducted a $50 bank service charge. The collection has not been recorded. Required 1. Prepare a September 30 bank reconciliation for the company. 2. Prepare the general journal entries needed to adjust the book balance of cash to the reconciled balance. Analysis Component: The preceding bank statement discloses three places where the cancelled cheques returned with the bank statement are not numbered sequentially. In other words, some of the prenum- bered cheques in the sequence are missing. Several possible situations would explain why the cancelled cheques returned with a bank statement might not be numbered sequentially. Describe three possible explanations. Balance of previous statement on Aug. 31/20. 6 deposits and other credits totalling. 9 cheques and other debits totalling. Current balance as of Sept. 30/20. Chequing Account Transactions 10.674.50 22,417.05 26,296.05 6.795.50 Transaction Transaction Date Amount Description Date Amount Description Sept. 05 5,643.20 +Deposit Sept. 25 4,230.60 +Deposit 30 45.00 +Interest 12 2,561.45 +Deposit 30 3,500.00 17 1,176.50 -NSF cheque +Credit memo 221 21 6,436.80 +Deposit Date Cheque No. Amount Date Cheque No. Amount Sept. 03 5904 9,340.55 Sept. 22 5888 6,220.00 07 5901 1,450.00 24 5909 2,140.40 08 5905 338.25 28 5907 3.324.60 10 5903 1,320.15 29 5902 985.60 r Company's accounting records: Cash Acct. No. 1 Date Explanation PR Debit Credit Balanc 2020 Aug. 31 Balance 2,968. Sept. 30 30 CR12 CD23 20,005.75 22,974 15,071.2 7.903. Deposits Made Cheques Written $ 5,643.20 No. 5901 2,561.45 5902......... 6,436.80 5903......... 4.230.60 5904...... 1,133.70 5905....... Cash Receipts. $20,005.75 5906.. 5907 59082 5909...... Total Sept. Cash Disbursements