Financial Accounting: P7-1 The cash transactions and cash balances of Banner Inc

Financial Accounting 
P7-1 
The cash transactions and cash balances of Banner Inc., for July were as follows: 
1. The ledger account for Cash showed a balance at July 31 of $125,568. 
2. The July bank statement showed a closing balance of $114,828. 
3. The cash received on July 31 amounted to $16,000. It was left at the bank in the night depository chute after banking hours on July 31 and therefore was not recorded by the bank on the July statement. 
4. Also included with the July bank statement was a debit memorandum from the bank for $50 representing service charges for July. 
5. A credit memorandum enclosed with the bank statement indicated that a non-interest bearing note receivable for $4,000 from Rene Manes, left with the bank for collection, had been collected and the proceeds credited to the account of Banner. Inc 
6. Comparison of the paid cheques returned by the bank with the entries in the accounting records revealed that cheque no. 821 for $519, issued July 15 in payment for office equipment, had been erroneously entered in banner’s records as $915. 
7. Examination of the paid cheques also revealed that three cheques, all issued in July, had not yet been paid by the bank: no.811 for $314; no.814 for $625; no. 823 for $175. 
8. Included with the July statement was a $200 cheque drawn by Howard Williams, a customer of Banner. Inc., This cheque was marked “NSF.” It had been included in the deposit of July 27 but had been charged back against the company’s account on July 31. 

Instructions 
a) Prepare a bank reconciliation statement for Banner. Inc., at July 31. (Record the transactions in the given order. Input all amounts as positive values. Omit the $ sign in your response) 
b) Prepare journal entries to adjust the accounts on July 31. Assume that the accounts have not been closed. 
c) State the amount of cash that should be included in the balance sheet at July 31. 
d) Explain why the balance as per the bank statement is often larger than the balance shown in its accounting records.
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