On March 31, 2019, Home Decorating Pavilion received a bank statement showing a

Question

On March 31, 2019, Home Decorating Pavilion received a bank statement showing a balance of $9,840. The balance in the firm's checkbook and Cash account on the same date was $9,994. The difference between the two balances is caused by the items listed below. a. A $2,965 deposit made on March 30 does not appear on the bank statement. b. Check 358 for $530 issued on March 29 and Check 359 for $1,740 issued on March 30 have not yet been paid by the bank. c. A credit memorandum shows that the bank has collected a $1,500 note receivable and interest of $150 for the firm d. A service charge of $34 appears on the bank statement. e. A debit memorandum shows an NSF check for $570. (The check was issued by Dane Jaris, a credit customer) f. The firm's records indicate that Check 341 of March 1 was issued for $900 to pay the month's rent. However, the canceled check and the listing on the bank statement show that the actual amount of the check was $800. g. The bank made an error by deducting a check for $605 issued by another business from the balance of Home Decorating Pavilion's account. Required: 1. Prepare a bank reconciliation statement for the firm as of March 31, 2019. 2. Record entries for any items on the bank reconciliation statement that must be journalized

Explanation / Answer

Solution:

Home Decorating Pavilion

Bank Reconciliation

Cash balance per bank, March 31

9840

Add:?Deposit in Transit

2965

Bank Error

605

3570

13410

Less:?Outstanding checks

# 358

530

# 359

1740

2270

Reconciled Bank Balance

11140

Cash balance per books, March 31

9994

Add:?Collection of Notes Receivable

1650

Error in Recording Check No # 341

100

1750

11744

Less:?Bank service charge

34

NSF check

570

604

Reconciled Cash Balance

11140

?

Journal entries

Cash

1650

Notes receivable

1500

Interest income

150

Cash

100

Rent expense

100

Accounts receivable

570

Cash

570

Miscellaneous expense

34

Cash

34

Home Decorating Pavilion

Bank Reconciliation

Cash balance per bank, March 31

9840

Add:?Deposit in Transit

2965

Bank Error

605

3570

13410

Less:?Outstanding checks

# 358

530

# 359

1740

2270

Reconciled Bank Balance

11140

Cash balance per books, March 31

9994

Add:?Collection of Notes Receivable

1650

Error in Recording Check No # 341

100

1750

11744

Less:?Bank service charge

34

NSF check

570

604

Reconciled Cash Balance

11140

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