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 $1,068 and No. 5893 for $501. 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	9,954	11,672	19,218

CHECKS AND DEBITS					DEPOSITS AND CREDITS
Date	No.	Amount			Date	Amount
09/03	5888	1,068			09/05	1,200
09/04	5902	718			09/12	2,239
09/07	5901	1,868			09/21	4,222
09/17		679	NSF		09/25	2,356
09/20	5905	979			09/30	15	IN
09/22	5903	392			09/30	1,640	CM
09/22	5904	2,136
09/28	5907	224
09/29	5909	1,890

From Chavez Company’s Accounting Records

Cash Receipts Deposited
Date		Cash Debit
Sept.	5		1,200
	12		2,239
	21		4,222
	25		2,356
	30		1,702
			11,719

Cash Payments
Check No.		Cash Credit
5901			1,868
5902			718
5903			392
5904			2,097
5905			979
5906			1,031
5907			224
5908			403
5909			1,890
			9,602

Cash			Acct. No. 101
Date	Explanation	PR	Debit	Credit	Balance
Aug. 31	Balance				15,931
Sept. 30	Total receipts	R12	11,719		27,650
30	Total payments	D23		9,602	18,048

Additional Information

1. (a) Check No. 5904 is correctly drawn for $2,136 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 $2,097.
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 $1,640 note for Chavez Company by the bank. The collection is not yet recorded.

Answer 1

CHAVEZ COMPANY
Bank Reconciliation
September 30
Bank statement balance		19218	Book balance		18048
Add:			Add:
Deposit of Sept. 30	1702		Interest earned	15
			Proceeds of note	1640
		1702			1655
		20920			19703
Deduct:			Deduct:
Check No. 5893	501		NSF check	679
Check No. 5906	1031		Error (check 5904)	39
Check No. 5908	403
		1935			718
Adjusted bank balance		18985	Adjusted book balance		18985

2

Date	General Journal	Debit	Credit
Sept 30	No journal entry required
Sept 30	Cash	15
	Interest earned		15
Sept 30	Cash	1,640
	Notes receivable		1,640
Sept 30	No journal entry required
Sept 30	Accounts receivable—S.Nilson	679
	Cash		679
Sept 30	Computer equipment	39		=2136-2097
	Cash		39