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 $1,095 and No. 5893 for $516. 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
18,000	9,864	11,597	19,733

CHECKS AND DEBITS					DEPOSITS AND CREDITS
Date	No.	Amount			Date	Amount
09/03	5888	1,095			09/05	1,196
09/04	5902	734			09/12	2,263
09/07	5901	1,807			09/21	4,257
09/17		622	NSF		09/25	2,314
09/20	5905	991			09/30	17	IN
09/22	5903	365			09/30	1,550	CM
09/22	5904	2,083
09/28	5907	278
09/29	5909	1,889

From Chavez Company’s Accounting Records

Cash Receipts Deposited
Date		Cash Debit
Sept.	5		1,196
	12		2,263
	21		4,257
	25		2,314
	30		1,764
			11,794

Cash Payments
Check No.		Cash Credit
5901			1,807
5902			734
5903			365
5904			2,039
5905			991
5906			989
5907			278
5908			399
5909			1,889
			9,491

Cash			Acct. No. 101
Date	Explanation	PR	Debit	Credit	Balance
Aug. 31	Balance				16,389
Sept. 30	Total receipts	R12	11,794		28,183
30	Total payments	D23		9,491	18,692

Additional Information

1. (a) Check No. 5904 is correctly drawn for $2,083 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 $2,039.
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 $1,550 note for Chavez Company by the bank. The collection is not yet recorded.

Required:

1. Prepare the September 30 bank reconciliation for this company.

	CHAVEZ COMPANY Bank Reconciliation September 30 Bank statement balance Book balance Add: Add: Deduct: Deduct: Adjusted bank balance Adjusted book balance

Answer 1

Solution:

Bank's Cash balance Particulars Ending balance as per Bank Statements Additions: Outstanding cash receipt Chavez Company Bank Reconciliation - September 30 Company's cash balance Amount Particulars $19,733.00 Ending Balance as per cash books Additions: $1,764.00 Note Collection Interest earned Amount $18,692.00 12 $1,550.00 $17.00 Deductions: Deductions: Outstanding Checks (Check no 5893, 5906 and 5908) $1,904.00 NSF Cheque Incorrect recording of cheque ($2,083 - $2,039) $622.00 $44.00 Adjusted bank balance $19,593.00 Adjusted Cash balance $19,593.00 30 34 36 mm 40 44 46 55 5) Sheet156 (46) Sheet743 Sheet744 Sheet745 She