Question

In: Accounting

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

On August 31, 2019, the balance in the checkbook and the Cash account of the Dry Creek Bed and Breakfast was $12,981. The balance shown on the bank statement on the same date was $13,897. Notes The firm’s records indicate that a $1,500 deposit dated August 30 and a $701 deposit dated August 31 do not appear on the bank statement. A service charge of $8 and a debit memorandum of $270 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, $ 110 Check 713, $ 125 Check 716, $ 238 Check 736, $ 577 Check 739, $ 78 Check 741, $ 120 A credit memorandum shows that the bank collected a $2,094 note receivable and interest of $53 for the firm. These amounts have not yet been entered in the firm’s records. Required: Prepare 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?

Solutions

Expert Solution

Journal Entry to record the trnsaction in books :

Date Account Debit Credit
31-Aug-19 Bank charges          8.00
Bank charges      270.00
Bank      278.00
(To record Bank charges for $8 and NSF charges $270)
31-Aug-19 Bank 2,147.00
Note Receivable 2,094.00
Interest on Note receivable        53.00
(To record reciept of note & interest in bank account)

Bank Reconciliation Statement as on 31st Aug 2019 :

The balance as per book will get updated to $14,850 after journal entry (129,81-278+2,147)

Particulars Amount
Balance as per book        14,850.00
Less Amount deposited but not appearing in bank
30-Aug          1,500.00
31-Aug             701.00
Add Cheque issued but not cleared
712        110.00
713             125.00
716             238.00
736             577.00
739                78.00
741             120.00
Balance as per Bank Statement 13,897.00

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