Question

On August 31, 2019, the balance in the checkbook and the Cash account of the Dry Creek Bed and Breakfast was $12,327. The balance shown on the bank statement on the same date was $13,222.

Notes

The firm’s records indicate that a $1,500 deposit dated August 30 and a $706 deposit dated August 31 do not appear on the bank statement.

A service charge of $9 and a debit memorandum of $345 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,	$	115
Check 713,	$	130
Check 716,	$	243
Check 736,	$	582
Check 739,	$	83
Check 741,	$	125

  

A credit memorandum shows that the bank collected a $2,109 note receivable and interest of $68 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?

Complete this question by entering your answers in the tabs below.

Bank Rec

General Journal

Analyze

Prepare a bank reconciliation statement for the firm as of August 31.

	DRY CREEK BED AND BREAKFAST Bank Reconciliation Statement August 31, 2019 Balance on bank statement Additions: Deductions: Total deductions Adjusted bank balance Balance in books Additions: Deductions: Adjusted book balance

Bank Rec

Journal entry worksheet

Record the deposit in transit.

Note: Enter debits before credits.

Record the bank service fee.
	Date General Journal Debit Credit Aug 31, 2019

Record the bank service fee.

Note: Enter debits before credits.

	Date General Journal Debit Credit Aug 31, 2019

Record the returned check.

Note: Enter debits before credits.

Date General Journal Debit Credit Aug 31, 2019 Record the outstanding checks. Note: Enter debits before credits. Date General Journal Debit Credit Aug 31, 2019 Record the note collected by the bank plus interest. Note: Enter debits before credits. Date General Journal Debit Credit Aug 31, 2019 What effect did the journal entries recorded as a result of the bank reconciliation have on the fundamental accounting equation? Net effect by G

Answer 1

DRY CREEK BED AND BREAKFAST
Bank Reconciliation Statement
08/31/19
Balance on bank statement		13222
Additions:
Deposit in Transit		2206
Deductions:
Check 712,	115
Check 713,	130
Check 716,	243
Check 736,	582
Check 739,	83
Check 741,	125
Total deductions		1278
Adjusted bank balance		14150
Balance in books		12327
Additions:
note receivable	2109
Interest on note receivable	68
		2177
Deductions:
service charge	9
NSF check	345	354
Adjusted book balance		14150

No Entry Required For Deposit in Transit
Record the bank service fee.	DR	CR
service fee	9
Cash		9
Record the returned check.	DR	CR
Account Receivable	345
Cash		345
No Entry Required Record the outstanding checks.
Record the note collected by the bank plus interest.	DR	CR
Cash	2177
Note Receivable		68
Interest		2109

What effect did the journal entries recorded as a result of the bank reconciliation have on the fundamental accounting equal

Increase by (68-9)=$59