On August 31, 2019, the balance in the checkbook and the Cash account of the Dry

Question

On August 31, 2019, the balance in the checkbook and the Cash account of the Dry Creek Bed and Breakfast was $12,362. The balance shown on the bank statement on the same date was $13,242.

Notes

The firms records indicate that a $1,540 deposit dated August 30 and a $710 deposit dated August 31 do not appear on the bank statement.

A service charge of $8 and a debit memorandum of $365 covering an NSF check have not yet been entered in the firm's records. (The check was issued by Art Corts, a credit customer.)

The following checks were issued but have not yet been paid by the bank:

  Check 712,$119 Check 713,$134 Check 716,$238 Check 736 ,$586 Check 739,$87 Check 741,$129

A credit memorandum shows that the bank collected a $2,129 note receivable and interest of $72 for the firm. These amounts have not yet been entered in the firm's records.

Required:

Make a bank reconciliation statement for the firm as of August 31.

Record general journal entries for items on the bank reconciliation statement that must be journalized.

Analyze:

What effect did the journal entries recorded as a result of the bank reconciliation have on the fundamental accounting equation?

Explanation / Answer

Solution:

*Note: Some figures is not correct as bank Reconciliation is not matching and in order to match bank reconciliation it is assumed that Check no 713 was issued for $143 wrongly mentioned in question as $134.

Analysis:

Bank Reconciliation - August 31 Ending balance as per Bank Statements $13,242.00 Additions: Deposit in transit: Deposit dated August 30 $1,540.00 Deposit dated August 31 $710.00 Total Additions $2,250.00 Deductions: Outstanding Checks: Check 712 $119.00 Check 713 * $143.00 Check 716 $238.00 Check 736 $586.00 Check 739 $87.00 Check 741 $129.00 Total Deductions $1,302.00 Adjusted Bank Balance $14,190.00 Ending Balance as per cash books $12,362.00 Additions: Note receivable $2,129.00 Interest on Note receivable $72.00 Total Additions $2,201.00 Deductions: NSF Cheque $365.00 Service Charge $8.00 Total Deductions $373.00 Adjusted Cash Balance $14,190.00

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