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 $1,050 and No. 5893 for $520. Check No. 5893 was still outstanding as of September 30. The following information is available for its September 30 reconciliation.

From the September 30 Bank Statement

PREVIOUS BALANCE	TOTAL CHECKS AND DEBITS	TOTAL DEPOSITS AND CREDITS	CURRENT BALANCE
17,500	9,875	11,681	19,306

CHECKS AND DEBITS					DEPOSITS AND CREDITS
Date	No.	Amount			Date	Amount
09/03	5888	1,050			09/05	1,117
09/04	5902	742			09/12	2,224
09/07	5901	1,843			09/21	4,336
09/17		657	NSF		09/25	2,360
09/20	5905	916			09/30	14	IN
09/22	5903	405			09/30	1,630	CM
09/22	5904	2,122
09/28	5907	260
09/29	5909	1,880

From Chavez Company’s Accounting Records

Cash Receipts Deposited
Date		Cash Debit
Sept.	5		1,117
	12		2,224
	21		4,336
	25		2,360
	30		1,771
			11,808

Cash Payments
Check No.		Cash Credit
5901			1,843
5902			742
5903			405
5904			2,078
5905			916
5906			972
5907			260
5908			416
5909			1,880
			9,512

Cash			Acct. No. 101
Date	Explanation	PR	Debit	Credit	Balance
Aug. 31	Balance				15,930
Sept. 30	Total receipts	R12	11,808		27,738
30	Total payments	D23		9,512	18,226

Additional Information

1. (a) Check No. 5904 is correctly drawn for $2,122 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 $2,078.
2. (b) 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.
3. (c) The credit memorandum (CM) is from the collection of a $1,630 note for Chavez Company by the bank. The collection is not yet recorded.

Answer 1

CHAVEZ COMPANY
Bank Reconciliation
September 30
Bank statement balance		19306	Book balance		18226
Add:			Add:
Deposit of Sept. 30	1771		Interest earned	14
			Proceeds of note	1630
		1771			1644
		21077			19870
Deduct:			Deduct:
Check No. 5893	520		NSF check	657
Check No. 5906	972		Error (check 5904)	44
Check No. 5908	416
		1908			701
Adjusted bank balance		19169	Adjusted book balance		19169

2
Date	General Journal	Debit	Credit
Sept 30	No journal entry required
Sept 30	Cash	14
	Interest earned		14
Sept 30	Cash	1,630
	Notes receivable		1,630
Sept 30	No journal entry required
Sept 30	Accounts receivable—S.Nilson	657
	Cash		657
Sept 30	Computer equipment	44		=2122-2078
	Cash		44