Question

Sage Hill Inc.’s bank statement from Main Street Bank at August 31, 2022, gives the following information.

Balance, August 1		$18,635		Bank debit memorandum:
August deposits		71,235		Safety deposit box fee		$ 40
Checks cleared in August		68,663		Service charge		65
Bank credit memorandum:				Balance, August 31		21,162
Interest earned		60

A summary of the Cash account in the ledger for August shows the following: balance, August 1, $18,935; receipts $74,235; disbursements $73,555; and balance, August 31, $19,615. Analysis reveals that the only reconciling items on the July 31 bank reconciliation were a deposit in transit for $4,815 and outstanding checks of $4,515. In addition, you determine that there was an error involving a company check drawn in August: A check for $400 to a creditor on account that cleared the bank in August was journalized and posted for $40.

Determine deposits in transit. Deposits in transit $enter deposits it transit in dollars

Determine outstanding checks. (Hint: You need to correct disbursements for the check error.) Outstanding checks $ enter outstanding checks in dollars

Journalize the adjusting entries to be made by Sage Hill Inc. at August 31. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Date	Account Titles and Explanation	Debit	Credit
Aug. 31	enter an account title to record interest earned on August 31	enter a debit amount	enter a credit amount
	enter an account title to record interest earned on August 31	enter a debit amount	enter a credit amount
	(To record Interest earned)
Aug. 31	enter an account title for the adjusting entry to correct error in recording check on August 31	enter a debit amount	enter a credit amount
	enter an account title for the adjusting entry to correct error in recording check on august 31	enter a debit amount	enter a credit amount
	(To correct error in recording check)
Aug. 31	enter an account title to record service charge and safety deposit box fee on August 31	enter a debit amount	enter a credit amount
	enter an account title to record service charge and safety deposit box fee on August 31	enter a debit amount	enter a credit amount
	(To record service charge and safety deposit box fee)

Answer 1

	Bank Book	Receipts	Pymts
	Balance, August 1	18,635
	August deposits	71,235
	Safety deposit box fee		40
	Checks cleared in August		68,663
	Service charge		65
	Bank credit memorandum:
	Interest earned	60
	Balance, August 31		21,162
		89,930	89,930
	Cash Book	Receipts	Pymts
	Balance, August 1	18,935
	August deposits	74,235
	Disbursement		73,555
	Balance, August 31		19,615
		93,170	93,170
	Bank reconcilaition as on 31-Jul-22	in $
	Balance as per Bank Book	27,925
31-Jul-22	Deposit in Transit	-4,815
31-Jul-22	Chq #......deposited not credited in bank	-4,515
31-Jul-22	Outstanding chq in bank	40
	Balance as per Bank	18,635

			In $
	Journal Entry		Dr	Cr
31-Aug-22	Bank Account	Dr	60
	Interest Received for the month of Aug22	Cr		60
	Being Interest earned in Bank for Aug22
31-Aug-22	Sundry Creditors	Dr	360
	Bank Account	Cr		360
	Being chq#-----dated-----issued for $400 to M/s XYZ erronously entred as $40 in the bank book now rectified
31-Aug-22	Bank Charges	Dr	105
	Bank Account	Cr		105
	Being Bank chages for safety deposit box fee - $40 & service charges for Aug debited by bank now accounted
			420	420