Answer:
1. Adjusted cash balance = Adjusted bank statement balance = $133,620.
2. See the adjusting journal entries and explanation in part 2. below.
Explanation:
Note: The data in the question are merged and they are first sorted in the attached excel file before the questions are answered as follows:
1. Complete the bank reconciliation at December 31, 2019.
The bank reconciliation is presented in two ways as follows:
<u>a) Starting with cash book balance</u>
Gibson Energy Ltd.
Bank Reconciliation
at 31 December 2019
<u>Particulars Amount ($) </u>
Cash book bal. at 31 Dec. yet to be reconciled 62,000
Add:
Collected note receivable from XYZ Corp 80,000
Less:
Dishonored NSF check (7,000)
Overdraft interest expense (1,320)
Bank service charge <u> (60) </u>
Adjusted cash balance at Dec 31 <u> 133,620 </u>
<u>b) Starting with bank statement balance</u>
Gibson Energy Ltd.
Bank Reconciliation
at 31 December 2019
<u>Particulars Amount ($) </u>
Bank statement bal. at Dec 31 yet to reconciled 131,620
Add:
Cash deposited on December 9th yet be credited 85,000
Cash deposited on December 31 yet be credited 15,000
Check #52094 wrongly drawn 62,000
Less:
Outstanding checks 233 (83,000)
Outstanding checks 239 <u> (77,000) </u>
Adjusted bank statement balance at Dec. 31 <u> 133,620 </u>
2. Prepare the adjusting journal entries required to make the Cash in Bank account in the general ledger agree with the adjusted cash balance on the December 31 bank reconciliation. Include descriptions.
<u>Date Accounts title & explanation DR ($) CR ($) </u>
31 Dec 19 Cash 80,000
Note Receivable 78,049
Interest on note receivable 1,951
<em><u> (To record note receivable & int. collected from XYZ) </u></em>
31 Dec 19 Overdraft interest expense 1,320
Service charge 60
Cash 1,380
<em><u> (To record interest expense and bank charges) </u></em>
31 Dec 19 Account Receivable 7,000
Cash 7,000
<em><u> (To record NSF check dishonored) </u></em>
