Question

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 $1,023 and No. 5893 for $512. 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
18,000	9,862	11,530	19,668

CHECKS AND DEBITS					DEPOSITS AND CREDITS
Date	No.	Amount			Date	Amount
09/03	5888	1,023			09/05	1,189
09/04	5902	736			09/12	2,263
09/07	5901	1,853			09/21	4,108
09/17		637	NSF		09/25	2,390
09/20	5905	959			09/30	15	IN
09/22	5903	369			09/30	1,565	CM
09/22	5904	2,124
09/28	5907	279
09/29	5909	1,882

From Chavez Company’s Accounting Records

Cash Receipts Deposited
Date		Cash Debit
Sept.	5		1,189
	12		2,263
	21		4,108
	25		2,390
	30		1,704
			11,654

Cash Disbursements
Check No.		Cash Credit
5901			1,853
5902			736
5903			369
5904			2,085
5905			959
5906			1,030
5907			279
5908			428
5909			1,882
			9,621

Cash			Acct. No. 101
Date	Explanation	PR	Debit	Credit	Balance
Aug. 31	Balance				16,465
Sept. 30	Total receipts	R12	11,654		28,119
30	Total disbursements	D23		9,621	18,498

Additional Information
Check No. 5904 is correctly drawn for $2,124 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 $2,085. 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 $1,590 note for Chavez Company by the bank. The bank deducted a $25 collection fee. The collection and fee are not yet recorded.

·         Record the entry related to the September 30 deposit, if required.

Note: Enter debits before credits.

	Date General Journal Debit Credit Sept 30

·         Record the entry related to interest earned, if required.

Note: Enter debits before credits.

	Date General Journal Debit Credit Sept 30

·         Record the entry related to the note receivable and the collection fee, if required.

Note: Enter debits before credits.

	Date General Journal Debit Credit Sept 30

·         Record the entry related to the outstanding checks, if required.

Note: Enter debits before credits.

	Date General Journal Debit Credit Sept 30

Record the entry related to the NSF check, if required. Note: Enter debits before credits.

	Date General Journal Debit Credit Sept 30

·         Record the entry related to the error on check 5904, if required.

Note: Enter debits before credits.

	Date General Journal Debit Credit Sept 30

1. Prepare the September 30, 2017, bank reconciliation for this company.

HAVEZ COMPANY
Bank Reconciliation
September 30, 2017
Bank statement balance			Book balance
Add:			Add:
Deduct:			Deduct:
Adjusted bank balance			Adjusted book balance

Record the entry related to the September 30 deposit, if required.

Record the entry related to interest earned, if required.

Record the entry related to the note receivable and the collection fee, if required.

·         Record the entry related to the outstanding checks, if required.

Record the entry related to the NSF check, if required.

Record the entry related to the error on check 5904, if required.

Answer 1

Solution :

Chavez Company
Bank Reconciliation - September 30
Bank's Cash balance		Company's cash balance
Particulars	Amount	Particulars	Amount
Ending balance as per Bank Statements	$19,668.00	Ending Balance as per cash books	$18,498.00
Additions:		Additions:
Outstanding cash receipt	$1,704.00	Note Collection	$1,565.00
		Interest earned	$15.00
Deductions:		Deductions:
Outstanding Checks ($1030 + $428 +$512)	$1,970.00	NSF Cheque	$637.00
		Incorrect recording of cheque ($2,124 - $2,085)	$39.00
Up to date cash balance as per bank	$19,402.00	Up to date cash balance as per books	$19,402.00

Journal Entries - Chavez Company
S. No.	Particulars	Debit	Credit
1	No Entry
2	Cash A/c Dr	$15.00
	To Interest Revenue		$15.00
	(Being interest credited by bank)
3	Cash A/c Dr	$1,565.00
	Servuce charges Dr	$25.00
	To Notes Receivables		$1,590.00
	(Being note collected by bank and collection fee charged)
4	No Entry
5	Accounts Receivables Dr	$637.00
	To Cash		$637.00
	(Being cheque dishonored by bank)
6	Computer Equipment Dr	$39.00
	To Cash		$39.00
	(Being entry recorded with short amount now corrected)