Question

The cash records and bank statement for the month of May for Diaz Entertainment are shown below.   
  

DIAZ ENTERTAINMENT Cash Account Records May 1, 2018, to May 31, 2018
Cash Balance May 1, 2018	+	Deposits		–	Checks	=	Cash Balance May 31, 2018
$5,330		$11,790			$11,920		$5,200

Deposits				Checks
Date	Desc.	Amount		Date	No.	Desc.	Amount
5/3	Sales	$  1,410		5/7	471	Legal fees	$  1,250
5/10	Sales	1,840		5/12	472	Property tax	1,620
5/17	Sales	2,470		5/15	473	Salaries	3,550
5/24	Sales	2,940		5/22	474	Advertising	1,450
5/31	Sales	3,130		5/30	475	Supplies	500
				5/31	476	Salaries	3,550
		$11,790					$11,920

  

P.O. Box 162647   Bowlegs, OK 74830   (405) 369-CASH		MIDWEST BANK Looking Out For You					Member FDIC
Account Holder:		Diaz Entertainment     124 Saddle Blvd.     Bowlegs, OK 74830			Account Number: Statement Date:		7772854360 May 31, 2018

Beginning Balance		Deposits and Credits				Withdrawals and Debits		Ending Balance
May 1, 2018		No.	Total			No.	Total	May 31, 2018
$ 6,210		7	$ 9,940			9	$ 9,695	$ 6,455

Deposits and Credits				Withdrawals and Debits					Daily Balance

Date	Amount	Desc.	Date	No.	Amount	Desc.	Date	Amount
5/4	$ 1,410	DEP	5/1	469	$  500	CHK	5/1	$ 5,710
5/11	1,840	DEP	5/2	470	380	CHK	5/2	5,330
5/18	2,470	DEP	5/9	471	1,250	CHK	5/4	6,740
5/20	1,200	NOTE	5/11		350	NSF	5/9	5,490
5/20	55	INT	5/12	472	1,620	CHK	5/11	6,980
5/25	2,940	DEP	5/18	473	3,550	CHK	5/12	5,360
5/31	25	INT	5/20		550	EFT	5/18	4,280
			5/25	474	1,450	CHK	5/20	4,985
			5/31		45	SF	5/25	6,475
							5/31	$ 6,455
	$ 9,940				$9,695

   

Desc.   DEP Customer deposit                  INT Interest earned             SF Service fees
            NOTE Note collected                   CHK Customer check           NSFNonsufficient funds
            EFT Electronic funds transfer

  
Additional information:

a. The difference in the beginning balances in the company’s records and the bank statement relates to checks #469 and #470, which are outstanding as of April 30, 2018 (prior month).
b. The bank made the EFT on May 20 in error. The bank accidentally charged Diaz for payment that should have been made on another account.

1. Prepare a bank reconciliation for Diaz's checking account on May 31, 2018. (Amounts to be deducted should be indicated with a minus sign. Total entries to the same account together when entering in the bank reconciliation.)

	DIAZ ENTERTAINMENT Bank Reconciliation May 31, 2018 Bank's Cash Balance Company's Cash Balance Per bank statement Per general ledger Bank balance per reconciliation Company balance per reconciliation

2. Record the necessary cash adjustments. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Total entries to the same account together when entering in the journal entry carousel.)
  

Answer 1

Solution 1:

Diaz Entertainment
Bank Reconciliation - May 31
Bank's Cash balance		Company's cash balance
Particulars	Amount	Particulars	Amount
Ending balance as per Bank Statements	$6,455.00	Ending Balance as per cash books	$5,200.00
Additions:		Additions:
Outstanding deposit	$3,130.00	Note Collection	$1,200.00
Incorrect EFT debited by bank	$550.00	Interest revenue	$80.00
Deductions:		Deductions:
Outstanding Checks (Check 475 and check 476)	$4,050.00	NSF Check	$350.00
		Service Charge	$45.00
Up to date cash balance as per bank	$6,085.00	Up to date cash balance as per books	$6,085.00

Solution 2:

Journal Entries - Diaz Entertainment
Date	Particulars	Debit	Credit
31-May	Cash Dr	$1,200.00
	To Note receivables		$1,200.00
	(To record note collected by bank)
31-May	Cash Dr	$80.00
	To Interest Revenue		$80.00
	(To record interest revenue)
31-May	Accounts receivables Dr	$350.00
	To Cash		$350.00
	(To record NSF check from customer)
31-May	Service Charges Dr	$45.00
	To Cash		$45.00
	(Being service charges debited by bank)