Question

On March 31, 2019, Home Decorating Pavilion received a bank statement showing a balance of $9,740. The balance in the firm's checkbook and Cash account on the same date was $10,164. The difference between the two balances is caused by the items listed below.

1. A $2,865 deposit made on March 30 does not appear on the bank statement.
2. Check 358 for $480 issued on March 29 and Check 359 for $1,640 issued on March 30 have not yet been paid by the bank.
3. A credit memorandum shows that the bank has collected a $1,200 note receivable and interest of $120 for the firm.
4. A service charge of $24 appears on the bank statement.
5. A debit memorandum shows an NSF check for $520. (The check was issued by Dane Jaris, a credit customer.)
6. The firm's records indicate that Check 341 of March 1 was issued for $700 to pay the month's rent. However, the canceled check and the listing on the bank statement show that the actual amount of the check was $600.
7. The bank made an error by deducting a check for $555 issued by another business from the balance of Home Decorating Pavilion’s account.

Required:

1. Prepare a bank reconciliation statement for the firm as of March 31, 2019.
2. Record entries for any items on the bank reconciliation statement that must be journalized.

Answer 1