The cash account for Santiago Co. on May 31, 2009 indicated a balance of SI 5,51

Question

The cash account for Santiago Co. on May 31, 2009 indicated a balance of SI 5,515. I be May ban statement indicated an ending balance of $20,245. Comparing the bank statement, the canceled checks, and t accompanying memos with the records revealed the following reconciling items: Checks outstanding totaled S4.820. A deposit of S3.796 had been made too late to appear on the bank statement. A check for $1, 233 returned with the statement had been inconrrectly recorded as S233. The check was originally credited to accounts payable. The bank collected $5,541 on a note left for collection. The payment consisted of $5,000 of principal and $541 of interest income, Bank service charges for May amounted to $45. A cheek for $790 was returned by the bank because of insufficient funds. Prepare a bank reconciliation as of May 31, 2009. Please use the attached bank reconciliation worksheet. Journalize the necessary entries. Date Description Debit Credit.

Explanation / Answer

Bank Rec Book Balance    15,515.00 Add Checks outstanding       4,820.00 Less error in books    (1,000.00) Add Note collection       5,541.00 Less Bank Fee          (45.00) Less NSF Cheque        (790.00) Adjusted Balance    24,041.00 Bank Balance    20,245.00 Add Not on bank statement, treat as deposit in tran       3,796.00 Adjusted Balance    24,041.00 Dr.Cash 5,541 Cr.Note Receivable 5,000 Cr. Interest on Note Receivable 541 (Collect of note) Dr. Bank Expense 45 Cr. Cash 45 (Bank charge) Dr. Accounts Receivable 790 Cr. Cash 790 (To record return NSF Check) Dr. Accounts Payable 1000 Cr. Cash 1000 (Error in check)

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