On October 31, 2021, the bank statement for the checking account of Hollybuster Video shows a balance of $11,570, while the company's records show a balance of $10,858. Information that might be useful in preparing a bank reconciliation is as follows: a. Outstanding checks are $1,120.b. The October 31 cash receipts of $575 are not deposited in the bank until November 2.c. One check written in payment of utilities for $115 is correctly recorded by the bank but is recorded by Hollybuster as a disbursement of $155.d. In accordance with prior authorization, the bank withdraws $500 directly from the checking account as payment on a note payable. The interest portion of that payment is $50 and the principal portion is $450. Hollybuster has not recorded the direct withdrawal.e. Bank service
fees of $50 are listed on the bank statement.f. A deposit of $782 is recorded by the bank on October 13, but it did not belong to Hollybuster. The deposit should have been made to the checking account of Videos Unlimited, a separate company.g. The bank statement includes a charge of $105 for an NSF check. The check is returned with the bank statement and the company will seek payment from the customer. Required: 1. Prepare a bank reconciliation for the Hollybuster checking account on October 31, 2021.2. Record the necessary cash adjustments.
What will be an ideal response?
Requirement 1
| Hollybuster Video |
| Bank Reconciliation |
| October 31, 2021 |
| Bank's Cash Balance | Company's Cash Balance |
| Per bank statement | $11,570 | Per general ledger | $10,858 |
| Deposits outstanding | +575 | Company error | +40 |
| Checks outstanding | ?1,120 | EFT for note | ?500 |
| Bank error | ?782 | Service fees | ?50 |
| ? | NSF check | ?105 | |
| Per reconciliation | $10,243 | Per reconciliation | $10,243 |
Requirement 2
| ? | Debit | Credit |
| Cash | 40 | ? |
| Utilities Expense | ? | 40 |
| Notes Payable | 450 | ? |
| Interest Expense | 50 | ? |
| Service Fees Expense | 50 | ? |
| Accounts Receivable | 105 | ? |
| Cash | ? | 655 |
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