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 $494. The following information is available for its September 30 reconciliation. 

From the September 30 Bank Statement 

From Chavez Company's Accounting Records

Additional Information 

Check No. 5904 is correctly drawn for $2.112 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 $2.072. The NSF check shown in the statement was originally received from a customer, S. Nilsory in payment of her account. Its return has not yet been recorded by the company. The credit memorandum (CM) is from the collection of a $1,610 note for Chavez Company by the bank. The bank deducted a $18 collection expense. The collection and expense are not yet recorded.

Required: 

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

Answer 1

				Bank Reconcilation
	Bank Statement Balance				20,773.00	Book Balance				19,678
	AddP					Add:
	Deposit of Sept 30			1,703.00		Interest Earned			22
						Proceed from Note			1592
					1,703.00					1614
					22,476.00					21,292.00
	Deduct:					Deduct:
	Check No 5893			494		NSF Check			671
	Check No 5906			967.00		Error (Check 5904)			40
	Check No 5908			434						711
					1,895.00
	Adjusted Bank Balance				20,581.00	Adjusted Book balance				20,581.00
		Adjusting entries
	Date	Accounting titles & explanations				debit	Credit
2)	2)	Cash				22
		interest earned					22
3)	3)	Cash				1,592
		collection expense				18
		Note receivable					1,610
5)	5)	Accounts receivable -S.Nilson				671
		Cash					671
6)	6)	Computer Equipment				40
		cash					40
		1)	no entry required for deposit
		4)	no entry required for checks oustanding