Stewart Recording Studio, owned by Ron Stewart, showed the following bank reconciliation at March 31 — list deposits made and cheques written during April taken from Cash Receipts

Stewart Recording Studio, owned by Ron Stewart, showed the following bank reconciliation at March 31:

A list of deposits made and cheques written during April, taken from the Cash Receipts Journal and Cash Disbursements Journal, is shown below:

The following bank statement is available for April:

In reviewing cheques returned by the bank, the bookkeeper discovered that cheque #28, for delivery expense, was recorded in the Cash Disbursements Journal correctly as $4,900. The NSF cheque for $14,200 was that of customer Oprah Winney, deposited in March.

On the bank statement, the payment for $15,900 is regarding a note payable. There is also a deposit of $120,000 dated April 30. It is an investment made by the owner into the business (the bank transferred the funds electronically from the owner's personal account to his business account, which is why it was not recorded in the Cash Receipts Journal).

Required

a. Prepare bank reconciliation for Stewart Recording Studio at April 30.

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b. Prepare the necessary journal entries to bring the General Ledger Cash account into agreement with the adjusted balance on the bank reconciliation.

SOLUTION

STEWART RECORDING STUDIO

Bank Reconciliation

April 30, 2014

Bank statement balance..................	Bank statement balance..................	Bank statement balance..................	Bank statement balance..................	$110,113	$110,113		Book balance.........................		$11,213
Add:							Add:
Deposit of April 30 in transit........	Deposit of April 30 in transit........	Deposit of April 30 in transit........	Deposit of April 30 in transit........	44,600	44,600		Owner Investment...............		120,000
Error (Chq #28: 9,400 – 4,900).....	Error (Chq #28: 9,400 – 4,900).....	Error (Chq #28: 9,400 – 4,900).....	Error (Chq #28: 9,400 – 4,900).....		4,500				$131,213
Deduct:				$159,213	$159,213		Deduct:
Deduct:							Deduct:
Outstanding cheques:	Outstanding cheques:	Outstanding cheques:	Outstanding cheques:				NSF — Oprah Winney ...	$14,200
#14.............	$840	$840					Service charge...............	175
#22.............	315	315					Interest expense............	450
#25.............	940	940					Payment.........................	15,900	30,725
#27.............	4,230	4,230
#30.............	41,000	41,000
#32.............		11,400		58,725	58,725
Adjusted bank balance.....................	Adjusted bank balance.....................	Adjusted bank balance.....................	Adjusted bank balance.....................	$100,488	$100,488		Adjusted book balance......		$100,488
b)
Apr. 30	Accounts Receivable – Oprah Winney..........................	Accounts Receivable – Oprah Winney..........................	Accounts Receivable – Oprah Winney..........................	Accounts Receivable – Oprah Winney..........................	Accounts Receivable – Oprah Winney..........................	Accounts Receivable – Oprah Winney..........................	Accounts Receivable – Oprah Winney..........................	14,200
		Cash...................................	Cash...................................						14,200
	To reinstate customer account.	To reinstate customer account.	To reinstate customer account.	To reinstate customer account.	To reinstate customer account.	To reinstate customer account.
30	Bank Service Charges Expense..............	Bank Service Charges Expense..............	Bank Service Charges Expense..............	Bank Service Charges Expense..............	Bank Service Charges Expense..............	Bank Service Charges Expense..............		175
		Cash........................................	Cash........................................						175
	To record April bank service charges.	To record April bank service charges.	To record April bank service charges.	To record April bank service charges.	To record April bank service charges.	To record April bank service charges.	To record April bank service charges.
30	Interest Expense...................	Interest Expense...................	Interest Expense...................					450
		Cash.......................................	Cash.......................................						450
	To record April interest expense.	To record April interest expense.	To record April interest expense.	To record April interest expense.	To record April interest expense.	To record April interest expense.
30	Note Payable..........................	Note Payable..........................	Note Payable..........................					15,900
		Cash.......................................	Cash.......................................						15,900
	To record April payment on note.	To record April payment on note.	To record April payment on note.	To record April payment on note.	To record April payment on note.	To record April payment on note.
30	Cash.............................................	Cash.............................................	Cash.............................................				120,000	120,000
		Ron Stewart, Capital............................	Ron Stewart, Capital............................	Ron Stewart, Capital............................	Ron Stewart, Capital............................	Ron Stewart, Capital............................			120,000
	To record investment by owner.	To record investment by owner.	To record investment by owner.	To record investment by owner.	To record investment by owner.	To record investment by owner.