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Problem 6-5A Preparing a bank reconciliation and recording adjustments LO P3

[The following information applies to the questions displayed below.]

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 $1,090 and No. 5893 for $499. Check No. 5893 was still outstanding as of September 30. The following information is available for its September 30 reconciliation.

From the September 30 Bank Statement

PREVIOUS BALANCE	TOTAL CHECKS AND DEBITS	TOTAL DEPOSITS AND CREDITS	CURRENT BALANCE
18,000	9,944	11,546	19,602

CHECKS AND DEBITS					DEPOSITS AND CREDITS
Date	No.	Amount			Date	Amount
09/03	5888	1,090			09/05	1,107
09/04	5902	783			09/12	2,268
09/07	5901	1,888			09/21	4,259
09/17		601	NSF		09/25	2,344
09/20	5905	981			09/30	18	IN
09/22	5903	395			09/30	1,550	CM
09/22	5904	2,111
09/28	5907	241
09/29	5909	1,854

From Chavez Company’s Accounting Records

Cash Receipts Deposited
Date		Cash Debit
Sept.	5		1,107
	12		2,268
	21		4,259
	25		2,344
	30		1,746
			11,724

Cash Payments
Check No.		Cash Credit
5901			1,888
5902			783
5903			395
5904			2,066
5905			981
5906			995
5907			241
5908			447
5909			1,854
			9,650

Cash			Acct. No. 101
Date	Explanation	PR	Debit	Credit	Balance
Aug. 31	Balance				16,411
Sept. 30	Total receipts	R12	11,724		28,135
30	Total payments	D23		9,650	18,485

Additional Information

1. (a) Check No. 5904 is correctly drawn for $2,111 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 $2,066.
2. (b) 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.
3. (c) The credit memorandum (CM) is from the collection of a $1,550 note for Chavez Company by the bank. The collection is not yet recorded.

Answer 1

CHAVEZ COMPANY
Bank Reconciliation
Sep-30
Bank Statement Balance		19,602	Book Balance		18,485
Add:			Add:
Deposit in Transit of Sep 30	1,746		Note Collected	1,550
			Interest Received	18
Deduct:			Deduct:
Outstanding Checks(#5893)	499		Error in recording check #5904	45
Outstanding Checks(#5908)	447		NSF Check	601
Outstanding Checks(#5906)	995
Adjusted Bank Balance		19,407	Adjusted Book Balance		19,407