On August 31, 2019, the balance in the checkbook and the Cash account of the Dry

Question

On August 31, 2019, the balance in the checkbook and the Cash account of the Dry Creek Bed and Breakfast was $12.219. The balance shown on the bank statement on the same date was $13,162. Notes a. The firm's records indicate that a $1,380 deposit dated August 30 and a $694 deposit dated August 31 do not appear on the bank statement. b. A service charge of $9 and a debit memorandum of $285 covering an NSF check have not yet been entered in the firm's records. c. The following checks were issued but have not yet been paid by the bank (The check was issued by Art Corts, a credit customer.) Check 712, $103 Check 713, 118 Check 716, $231 Check 736, $570 Check 739, $ 71 Check 741, $113 d, A credit memorandum shows that the bank collected a $2,049 note receivable and interest of $56 for the firm. These amounts have not yet been entered in the firm's records. Required 1. Prepare a bank reconciliation statement for the firm as of August 31. 2. Record general journal entries for items on the bank reconciliation statement that must be journalized. Analyze: What effect did the journal entries recorded as a result of the bank reconciliation have on the fundamental accounting equation?

Explanation / Answer

Solution 1:

Solution 2:

Dry Creek Bed and Breakfast Bank Reconciliation - August 31 Bank's Cash balance Company's cash balance Particulars Amount Particulars Amount Ending balance as per Bank Statements $13,162.00 Ending Balance as per cash books $12,219.00 Additions: Additions: Outstanding cash receipt $2,074.00 Collection Notes Receivables $2,049.00 Interest $56.00 Deductions: Deductions: Outstanding Checks $1,206.00 NSF Cheque $285.00 Service Charges $9.00 Up to date cash balance as per bank $14,030.00 Up to date cash balance as per books $14,030.00

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