9) Franklin Company\'s bank reconciliation as of August 3 1 is shown below. Bank

Question

9) Franklin Company's bank reconciliation as of August 3 1 is shown below. Bank balance + Deposit in transit 4,500 - Outstanding checks -3,900 Adjusted bank balance $14.837 $13,162 -50 1,725 $14,837 $14.237 Book balance Bank service fees Note collected Adjusted book balance 9) enties that Clayborn must record as a result of the bank reconciliation include: A) Debit Notes Receivable $1,725; credit Cash $1,725. B) Debit Cash $1,725; credit Notes Receivable $1,725. C) Debit Cash $4,500; credit Sales $4,500. D) Debit Cash $50; credit Bank Service Fee Expense $50. E) Debit Misc. Expense $3,900; credit Cash $3,900.

Explanation / Answer

While preparing bank reconciliation, adjusting journl entries are passed in books to recocile balance of books with bank statement The journal entries to be passed in books include the adjustment to books for bank service charges and note collection. For note collection, cash amount increases and notes receivable is decreased, so the adjusting entry will be: Cash 1725       Notes Receivable 1725

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