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Chavez Company most recently reconciled its bank statement and book balances of cash on August 31 and it reported two checks outstanding, No. 5888 for $1,014 and No. 5893 for $519. The following information is available for its September 30, 2017, reconciliation.

From the September 30 Bank Statement

From Chavez Company’s Accounting Records

Additional Information
Check No. 5904 is correctly drawn for $2,095 to pay for computer equipment; however, the recordkeeper misread the amount and entered it in the accounting records with a debit to Computer Equipment and a credit to Cash of $2,056. The NSF check shown in the statement was originally received from a customer, S. Nilson, in payment of her account. Its return has not yet been recorded by the company. The credit memorandum is from the collection of a $1,620 note for Chavez Company by the bank. The bank deducted a $21 collection fee. The collection and fee are not yet recorded.

Required:

1. Prepare the September 30, 2017, bank reconciliation for this company.;

PREVIOUS BALANCE TOTAL CHECKS AND DEBITS TOTAL DEPOSITS AND CREDITS CURRENT BALANCE 19,500 9,877 11,481 21,104

Explanation / Answer

Bank reconciliation Bank balance 21104 Add Deposit in transit 1793 22897 Less Outstanding checks 1975 Adjusted bank balance 20922 Outstanding checks Chq no. 5906 1008 Chq no. 5908 448 Chq no. 5893 519 1975 Cash balance 19950 Add Direct deposit in bank 1599 Interest 13 1612 Less Error in check (2095-2056) 39 Cheque book 601 640 Adjusted cash balance 20922

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