The cash receipts and the cash payments of Campbell Hardware for January 2014 are as follows:

The Cash account of Campbell Hardware shows a balance of $39,478 at January 31, 2014. Campbell Hardware received the bank statement shown on the next page on January 31, 2014.

Additional data for the bank reconciliation:
a. The EFT deposit was a receipt of monthly rent. The EFT debit was payment of monthly insurance.
b. The NSF cheque was received from B. Crawford.
c. The $12,744 bank collection of a note receivable on January 22 included $300 interest revenue.
d. The correct amount of cheque no. 313, a payment on account, is $12,436. (Campbell Hardware's accountant mistakenly recorded the cheque for $12,562.)
Required
1. Prepare the Campbell Hardware bank reconciliation at January 31, 2014.
2. Describe how a bank account and the bank reconciliation help Campbell 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:

Cash Receipts (Posting reference is CR) Cash Payments (Posting reference is CP) Date Cash Debit Cheque No. Cash Credit $ 3,672 1,668 12,562 2,584 8,588 3,900 1,304 6,268 Jan. 3 311 312 313 $20,988 1,480 1,980 7,788 20,736 2,404 1,428 $56,804 10 16 314 22 315 29 316 31 317 Total 318 319 800 320 12,664 $54,010 Total Bank Statement for January 2014 Description Withdrawals Deposits Date Balance Balance Forward Jan01 Jan01 Jan04 Jan07 Jan09 Jan12 Jan13 Jan14 Jan15 Jan17 Jan18 Jan21 Jan22 Jan23 Jan26 Jan30 Jan31 36,684 37,736 1,052 20,988 EFT Rent Collection Deposit Chq#00311 Deposit Deposit Chq#00313 NSF Cheque Chq#00312 Deposit Chq#00314 58,724 55,052 3,672 1,480 1,980 56,532 58,512 46,076 42,620 12,436 3,456 1,668 40,952 7,788 48,740 2,584 1,316 46,156 44,840 EFT Insurance Bank Collection 12,744 20,736 57,584 78,320 Deposit Chq#00315 Chq#00316 Service Charge 8,588 69,732 65,832 3,900 40 65,792 37,660 66,768