Question

Exercise 7-14 Metlock, Inc.’s bank statement from Main Street Bank at August 31, 2022, gives the following information. Balance, August 1 $18,740 Bank debit memorandum: August deposits 71,340 Safety deposit box fee $ 45 Checks cleared in August 68,658 Service charge 70 Bank credit memorandum: Balance, August 31 21,372   Interest earned 65 A summary of the Cash account in the ledger for August shows the following: balance, August 1, $19,040; receipts $74,340; disbursements $73,550; and balance, August 31, $19,830. Analysis reveals that the only reconciling items on the July 31 bank reconciliation were a deposit in transit for $4,820 and outstanding checks of $4,520. In addition, you determine that there was an error involving a company check drawn in August: A check for $400 to a creditor on account that cleared the bank in August was journalized and posted for $40.

Determine deposits in transit. Deposits in transit $enter deposits it transit in dollars

Determine outstanding checks. (Hint: You need to correct disbursements for the check error.) Outstanding checks $enter outstanding checks in dollars

Prepare a bank reconciliation at August 31. (List items that increase balance as per bank & books first.) Journalize the adjusting entries to be made by Metlock, Inc. at August 31. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Aug. 31 enter an account title to record interest earned on August 31 enter a debit amount enter a credit amount enter an account title to record interest earned on August 31 enter a debit amount enter a credit amount (To record Interest earned) Aug. 31 enter an account title for the adjusting entry to correct error in recording check on August 31 enter a debit amount enter a credit amount enter an account title for the adjusting entry to correct error in recording check on august 31 enter a debit amount enter a credit amount (To correct error in recording check) Aug. 31 enter an account title to record service charge and safety deposit box fee on August 31 enter a debit amount enter a credit amount enter an account title to record service charge and safety deposit box fee on August 31 enter a debit amount enter a credit amount (To record service charge and safety deposit box fee)

Answer 1

	Metlock, Inc.
	Bank Reconciliation
	August 31, 2022
	Bank Statement Balance		21,372	Book Balance		19,830
	Add:			Add:
	Deposit in Transit	7,820		Proceeds of note less collection charge	65
	Deduct:			Deduct:
				SERVICE CHARGE	115
	Outstanding Checks	9,772		Error in recording check	360
	Adjusted Bank Balance		19,420	Adjusted Book Balance		19,420
	Journal Entries
	General Journal	Debit	Credit
1)	CASH	65
	Interest Revenue		65
	(To record Interest earned)
2)	Accounts Payable	360
	Cash		10
	(To correct error in recording check)
3)	Bank Charges	115
	Cash		115
	(To record service charge and safety deposit box fee)