Question

Bourne Incorporated reports a cash balance at the end of the month of $2,620. A comparison of the company's cash records with the monthly bank statement reveals several additional cash transactions: bank service fees ($85), an NSF check from a customer ($350), a customer’s note receivable collected by the bank ($1,000), and interest earned ($35). Required: Record the necessary entries to adjust the balance of cash. (If

Answer 1

Answer: please refer to the explanation section for journal entries

Explanation:

The following are adjustments journal entries to reconcile Cash Balance and the Bank Account. the Borne Incorporated will need to process the following journals in their Cash Balance Account.

DR Bank service fees 85

CR      Bank           85

Bank service fees are an expense incurred . Cash balance will be credited (reduced) by bank charges expense

DR Bank   350

CR      Trade Receivables 350

Recognising check received from a customer.  Payment from a customer will increase our Bank/Cash Balance and decrease Trade Receivables  

bank/cash is debited and trade receivables are credited

DR Bank 1000

CR       Notes Receivable 1000

Notes Receivable is an asset to the company. therefore  when a note receivable is collected by a bank, notes receivable asset is credited (reduced) and  Bank/Cash balance is debited (increased) to recognise cash received  

DR Bank    35

CR      Interest income 35

Recognising interest income earned. Bank/Cash Balance will increase  

and income will also increase. bank is debited and interest income is credited