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Chavez Company most recently reconciled its bank statement and book balances of cash on August 31...

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 2

2. Prepare the journal entries to adjust the book balance of cash to the reconciled balance.

Solutions

Expert Solution

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

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