Infinity Emporium Company received the monthly

statement for its bank #208

Infinity Emporium Company received the monthly statement for its bank account, showing a
balance of $66,744 on August 31. The balance in the cash account in the company's accounting
system at that date was $71,952. After comparing the cheques written by the company and
those deducted from the bank account in August, the company's accountant determined that all
six cheques (totalling $6,180) that had been outstanding at the end of July were processed by
the bank in August; however, five cheques written in August, totalling $4,560, were outstanding
on August 31. A review of the deposits showed that a deposit made by the company on July 31
for $1 1,532 was recorded by the bank on August 1, and an August 31 deposit of $12,240 was
recorded in the company's accounting system but had not yet been recorded by the bank. The
August bank statement also showed a service fee of $24, a customer's cheque in the amount of
$204 that had been returned NSF, a bank loan payment of $900 that the bank had deducted
automatically, and a customer's note for $3,600 that the bank had collected for Infinity
Emporium and deposited in its account.Required:a. Prepare a bank reconciliation as at August
31. b. How much cash does Infinity Emporium actually have available as at August 31?c.
Explain how the adjusted (corrected) balance of cash, as determined by the bank reconciliation,
could be higher than both the balance shown on the bank statement and the balance shown in
the company's cash account.d. Prepare adjusting journal entries to record all the necessary
adjustments to bring the cash account to its correct balance.View Solution:
Infinity Emporium Company received the monthly statement for its bank

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