Question

Oscar’s Red Carpet Store maintains a checking account with Academy Bank. Oscar’s sells carpet each day but makes bank deposits only once per week. The following provides information from the company’s cash ledger for the month ending February 28, 2018.
  

	Date	Amount		No.	Date	Amount
Deposits:	2/4	$ 2,500	Checks:	321	2/2	$ 4,500
	2/11	2,100		322	2/8	550
	2/18	3,000		323	2/12	2,300
	2/25	3,900		324	2/19	2,000
Cash receipts:	2/26-2/28	1,400		325	2/27	350
				326	2/28	850
		$ 12,900		327	2/28	1,700
Balance on February 1		$   6,600				$12,250
Receipts		12,900
Disbursements		(12,250)
Balance on February 28		$   7,250

Information from February's bank statement and company records reveals the following additional information:
  

a. The ending cash balance recorded in the bank statement is $11,730.
b. Cash receipts of $1,400 from 2/26-2/28 are outstanding.
c. Checks 325 and 327 are outstanding.
d. The deposit on 2/11 includes a customer's check for $350 that did not clear the bank (NSF check).
e. Check 323 was written for $2,800 for advertising in February. The bank properly recorded the check for this amount.
f. An automatic withdrawal for Oscar's February rent was made on February 4 for $1,200.
g. Oscar's checking account earns interest based on the average daily balance. The amount of interest earned for February is $180.
h. In January, one of Oscar's suppliers, Titanic Fabrics, borrowed $5,600 from Oscar. On February 24, Titanic paid $5,800 ($5,600 borrowed amount plus $200 interest) directly to Academy Bank in payment for January's borrowing.
i. Academy Bank charged service fees of $100 to Oscar’s for the month.

1. Prepare a bank reconciliation for Oscar's checking account on February 28, 2018. (Amounts to be deducted should be indicated with a minus sign.)

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

balance as per book	7250
Add/less:
NSF	-350
Rent	-1200
Interest earned on checking account	180
note collected	5600
Interest on note	200
services charges	-100
error in recording check323 [2300-2800]	-500
adjusted balance	11080

2
)

Date	Account	Debit	credit
1	Accounts receivable	350
	cash		350
2	Rent expense	1200
	cash		1200
3	cash	180
	interest revenue		180
4-a	cash	5600
	note receivable		5600
	[Being note collected]
b	cash	200
	interest revenue		200
	[Being interest accrued on note collected]
5	Bank charges	100
	cash		100
6	advertising expense	500
	cash		500

Answer 2

balance as per book	7250
Add/less:
NSF	-350
Rent	-1200
Interest earned	180
note collected	5800
services charges	-100
error in recording check323 [2300-2800]	-500
adjusted balance	11080

2
)

Date	Account	Debit	credit
1	Accounts receivable	350
	cash		350
2	Rent expense	1200
	cash		1200
3	cash	180
	interest revenue		180
4	cash	5800
	note receivable		5600
	interest revenue		200
5	Bank charges	100
	cash		100
6	advertising expense	500
	cash		500