Fred Midas operates a roller skating center. He has just received the monthly ba

Question

Fred Midas operates a roller skating center. He has just received the monthly bank statement at March 31 from Citizen National Bank, and the statement shows and ending balance of $715. Listed on the statement are and EFT rent collection of $335, a service charge of $7, two NSF checks totaling $100, and a $9 charge for printed checks. In reviewing his cash records, Midas's identifies outstanding checks totaling $609 and a March 31 deposit in transit of $1,780. During March, he recorded a $300 check for the salary of a part-time employee as $30. Midas's cash account shows a March 31 balance of $1937.

Requirement

Use the bank reconciliation provided to make the journal entries that Midas should record on March 31 to update his cash account. Include an explanation for each entry.

Bank Reconciliation March 31, 2014 BANK: $715 1.780 2,495 (609 $ 1886 Balance, March 31 Add Deposit in transit Less: Outstanding checks Adjusted bank balance BOOKS $1,937 335 2,272 Balance, March 31 Add: EFT collection rent Less Correction of book error 270 NSF checks Charge for printed checks Service charge 100 7 (386) Adjusted book balance $ 1,886

Explanation / Answer

Adjustment Journal entries:

Date Accounts Titles and explanation Debit $ Credit $ Mar 31, 2014 Deposits in Transit 1780 Cash 1780 Cash 609 Unpaid checks (outstanding) 609 Cash 335 Rent Income 335 Salary account 270 Cash 270 (short recorded now rectified) NSF checks 100 Cash 100 Bank Charges 16 Cash 16

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