Question

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 $1,037 and No. 5893 for $508. The following information is available for its September 30, 2017, reconciliation. From the September 30 Bank Statement PREVIOUS BALANCE TOTAL CHECKS AND DEBITS TOTAL DEPOSITS AND CREDITS CURRENT BALANCE 20,000 9,783 11,411 21,628 CHECKS AND DEBITS DEPOSITS AND CREDITS Date No. Amount Date Amount 09/03 5888 1,037 09/05 1,187 09/04 5902 708 09/12 2,242 09/07 5901 1,852 09/21 4,103 09/17 657 NSF 09/25 2,342 09/20 5905 926 09/30 22 IN 09/22 5903 412 09/30 1,515 CM 09/22 5904 2,121 09/28 5907 215 09/29 5909 1,855 From Chavez Company’s Accounting Records Cash Receipts Deposited Date Cash Debit Sept. 5 1,187 12 2,242 21 4,103 25 2,342 30 1,718 11,592 Cash Disbursements Check No. Cash Credit 5901 1,852 5902 708 5903 412 5904 2,078 5905 926 5906 998 5907 215 5908 356 5909 1,855 9,400 Cash Acct. No. 101 Date Explanation PR Debit Credit Balance Aug. 31 Balance 18,455 Sept. 30 Total receipts R12 11,592 30,047 30 Total disbursements D23 9,400 20,647 Additional Information Check No. 5904 is correctly drawn for $2,121 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 $2,078. 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 $1,540 note for Chavez Company by the bank. The bank deducted a $25 collection fee. The collection and fee are not yet recorded. Required: 1. Prepare the September 30, 2017, bank reconciliation for this company.

2. Prepare the journal entries to adjust the book balance of cash to the reconciled balance. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

• 1 Record the entry related to the September 30 deposit, if required.

• 2 Record the entry related to interest earned, if required.

• 3 Record the entry related to the note receivable and the collection fee, if required.

• 4 Record the entry related to the outstanding checks, if required.

• 5 Record the entry related to the NSF check, if required.

• 6 Record the entry related to the error on check 5904, if required.

Answer 1

CHAVEZ COMPANY
Bank Reconciliation
September 30, 2017
Bank statement balance		21628	Book balance		20647
Add:			Add:
Deposit of Sept. 30	1718		Interest earned	22
			Proceeds of note less $15 fee	1515
		1718			1537
		23346			22184
Deduct:			Deduct:
Check No. 5893	508		NSF check	657
Check No. 5906	998		Error (check 5904)	43
Check No. 5908	356
		1862			700
Adjusted bank balance		21484	Adjusted book balance		21484
2
General Journal	Debit	Credit
1
No journal entry required
2
Cash	22
Interest earned		22
3
Cash	1,515
Collection expense	25
Notes receivable		1,540
4
No journal entry required
5
Accounts receivable—S.Nilson	657
Cash		657
6
Computer equipment	43		(2121-2078)
Cash		43