In: Accounting
Problem 8-5A Preparing a bank reconciliation and recording adjustments LO P3
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 $1,096 and No. 5893 for $489. 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 |
18,500 | 9,892 | 11,524 | 20,132 |
CHECKS AND DEBITS | DEPOSITS AND CREDITS | ||||||
Date | No. | Amount | Date | Amount | |||
09/03 | 5888 | 1,096 | 09/05 | 1,115 | |||
09/04 | 5902 | 753 | 09/12 | 2,286 | |||
09/07 | 5901 | 1,888 | 09/21 | 4,047 | |||
09/17 | 606 | NSF | 09/25 | 2,385 | |||
09/20 | 5905 | 972 | 09/30 | 15 | IN | ||
09/22 | 5903 | 368 | 09/30 | 1,676 | CM | ||
09/22 | 5904 | 2,083 | |||||
09/28 | 5907 | 268 | |||||
09/29 | 5909 | 1,858 | |||||
From Chavez Company’s Accounting Records
Cash Receipts Deposited | ||||
Date |
Cash Debit |
|||
Sept. | 5 | 1,115 | ||
12 | 2,286 | |||
21 | 4,047 | |||
25 | 2,385 | |||
30 | 1,736 | |||
11,569 | ||||
Cash Disbursements | ||||
Check No. |
Cash Credit |
|||
5901 | 1,888 | |||
5902 | 753 | |||
5903 | 368 | |||
5904 | 2,041 | |||
5905 | 972 | |||
5906 | 984 | |||
5907 | 268 | |||
5908 | 414 | |||
5909 | 1,858 | |||
9,546 | ||||
Cash | Acct. No. 101 | ||||
Date | Explanation | PR | Debit | Credit | Balance |
Aug. 31 | Balance | 16,915 | |||
Sept. 30 | Total receipts | R12 | 11,569 | 28,484 | |
30 | Total disbursements | D23 | 9,546 | 18,938 | |
Additional Information
Check No. 5904 is correctly drawn for $2,083 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 $2,041. 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 $1,700 note for
Chavez Company by the bank. The bank deducted a $24 collection fee.
The collection and fee are not yet recorded.Problem 8-5A Part 1
Required:
1. Prepare the September 30, 2017, bank
reconciliation for this company.
Bank Reconcilation | ||||||||||
Bank Statement Balance | 20,132 | Book Balance | 18,938 | |||||||
AddP | Add: | |||||||||
Deposit of Sept 30 | 1,736 | Interest Earned | 15 | |||||||
Proceed from Note | 1676 | |||||||||
1,736 | 1691 | |||||||||
21,868 | 20,629 | |||||||||
Deduct: | Deduct: | |||||||||
Check No 5893 | 489 | NSF Check | 606 | |||||||
Check No 5906 | 984 | Error (Check 5904) | 42 | |||||||
Check No 5908 | 414 | 648 | ||||||||
1,887 | ||||||||||
Adjusted Bank Balance | 19,981 | Adjusted Book balance | 19,981 | |||||||
Adjusting entries | ||||||||||
Date | Accounting titles & explanations | debit | Credit | |||||||
2) | 2) | Cash | 15 | |||||||
interest earned | 15 | |||||||||
3) | 3) | Cash | 1,676 | |||||||
collection expense | 24 | |||||||||
Note receivable | 1,700 | |||||||||
5) | 5) | Accounts receivable -S.Nilson | 606 | |||||||
Cash | 606 | |||||||||
6) | 6) | Computer Equipment | 42 | |||||||
cash | 42 | |||||||||
1) | no entry required for deposit | |||||||||
4) | no entry required for checks oustanding | |||||||||