Question

Pelzer Company reconciled its bank and book statement balances of Cash on August 31 and showed two cheques outstanding at that time, #5888 for $6,040 and #5893 for $1,443.00. The following information was available for the September 30, 2017, reconciliation:

From the September 30, 2017, bank statement

BALANCE OF PREVIOUS STATEMENT ON AUG. 31/17	10,368.00
6 DEPOSITS AND OTHER CREDITS TOTALLING	18,392.00
9 CHEQUES AND OTHER DEBITS TOTALLING	23,908.00
CURRENT BALANCE AS OF SEPT. 30/17	4,852.00

Chequing Account Transactions
Date	Amount	Transaction Description	Date	Amount	Transaction Description
Sept. 05	5,332.00	+ Deposit	Sept. 25	3,021.00	+ Deposit
12	2,228.00	+ Deposit	30	37.00	+ Interest
17	400.45	− NSF cheque	30	3,484.00	+ Credit memo
21	4,730.00	+ Deposit

Date	Cheque No.	Amount	Date	Cheque No.	Amount
Sept. 03	5904	9,340.55	Sept. 22	5888	6,040.00
07	5901	1,444.00	24	5909	1,764.00
08	5905	279.00	28	5907	2,740.00
10	5903	1,088.00	29	5902	812.00

From Pelzer Company’s accounting records:

Cash					Acct. No. 101
Date	Explanation	PR	Debit	Credit	Balance
2017
Aug. 31	Balance				2,445.00
Sept. 30		CR12	16,476.00		18,921.00
30		CD23		13,363.55	5,557.45

Deposits Made
Sept. 5	$5,332.00
12	2,228.00
21	4,730.00
25	3,021.00
30	1,165.00
Total Sept. Cash Receipts	$16,476.00

Cheques Written
No. 5901	$ 1,444.00
5902	812.00
5903	1,088.00
5904	3,940.55
5905	279.00
5906	590.00
5907	2,740.00
5908	706.00
5909	1,764.00
Total Sept. Cash Disbursements	$13,363.55

•    Cheque #5904 was correctly written for $9,340.55 to pay for computer equipment; however, the bookkeeper misread the amount and entered it in the accounting records with a debit to Computer Equipment and a credit to Cash as though it were for $3,940.55. The NSF cheque was originally received from a customer, Lisa Willis, in payment of her account. Its return was not recorded when the bank first notified the company.

•    The credit memo resulted from an electronic fund transfer of $3,534 for a customer payment. The bank had deducted a $50.00 bank service charge. The collection has not been recorded.

Required:
1. Prepare a September 30 bank reconciliation for the company. (Round your answers to 2 decimal places.)



2. Prepare the General Journal entries needed 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. Round your answers to 2 decimal places.)

Answer 1

			Bank Reconciliation
Bank Statement					Company's Books
Bank statement balances				4,852	Book balance of cash				5,557.45
Add:					Add:
Deposit in transit				1,165	collection of note			3,484
					interest earned			37
									3,521
				6,017					9,078.45
Deduct:					Deduct:
Cheques outstanding					Error in recording chq for computer			5400
cheque #	5893		1,443		NSF			400.45
	5906		590
	5908		706	2,739					5800.45
Adjusted bank balance				3,278	Adjusted book balance				3,278.00
Adjusting Entries
TR	Account titles & Explanations					Debit	Credit
1)	Cash					3,484
	Bank service charges					50
	Account receivable						3,534
2)	cash					37
	interest revenue						37
3)	Computer Equipment					5400
	cash						5400
4)	Accounts receivable					400.45
	cash						400.45
	No entry for deposit in transit and cheques outstanding