Question

In: Accounting

On August 31, 2019, the balance in the checkbook and the Cash account of the Dry...

On August 31, 2019, the balance in the checkbook and the Cash account of the Dry Creek Bed and Breakfast was $12,253. The balance shown on the bank statement on the same date was $13,182.

Notes

The firm’s records indicate that a $1,420 deposit dated August 30 and a $698 deposit dated August 31 do not appear on the bank statement.

A service charge of $7 and a debit memorandum of $305 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, $ 107
Check 713, $ 122
Check 716, $ 235
Check 736, $ 574
Check 739, $ 75
Check 741, $ 117

  

A credit memorandum shows that the bank collected a $2,069 note receivable and interest of $60 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?

Solutions

Expert Solution

DRY CREEK BED AND BREAKFAST
Bank Reconciliation Statement
08/31/19
Balance on bank statement 13182
Additions:
Deposit in Transit 2118
Deductions:
Check 712, 107
Check 713, 122
Check 716, 235
Check 736, 574
Check 739, 75
Check 741, 117
Total deductions 1230
Adjusted bank balance 14070
Balance in books 12253
Additions:
note receivable 2069
Interest on note receivable 60
2129
Deductions:
service charge 7
NSF check 305 312
Adjusted book balance 14070
No Entry Required For Deposit in Transit
Record the bank service fee. DR CR
service fee 7
Cash 7
Record the returned check. DR CR
Account Receivable 305
Cash 305
No Entry Required Record the outstanding checks.
Record the note collected by the bank plus interest. DR CR
Cash 2129
Note Receivable 2069
Interest 60

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

Increase by (60-7)=$53

ekkarill92 answered 2 years ago
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