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 $1,083 and No. 5893 for $480. 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
16,500	10,063	11,951	18,388

CHECKS AND DEBITS					DEPOSITS AND CREDITS
Date	No.	Amount			Date	Amount
09/03	5888	1,083			09/05	1,187
09/04	5902	752			09/12	2,297
09/07	5901	1,892			09/21	4,471
09/17		678	NSF		09/25	2,373
09/20	5905	979			09/30	23	IN
09/22	5903	450			09/30	1,600	CM
09/22	5904	2,111
09/28	5907	254
09/29	5909	1,864

From Chavez Company’s Accounting Records

Cash Receipts Deposited
Date		Cash Debit
Sept.	5		1,187
	12		2,297
	21		4,471
	25		2,373
	30		1,782
			12,110

Cash Payments
Check No.		Cash Credit
5901			1,892
5902			752
5903			450
5904			2,073
5905			979
5906			967
5907			254
5908			352
5909			1,864
			9,583

Cash			Acct. No. 101
Date	Explanation	PR	Debit	Credit	Balance
Aug. 31	Balance				14,937
Sept. 30	Total receipts	R12	12,110		27,047
30	Total payments	D23		9,583	17,464

Additional Information

1. (a) Check No. 5904 is correctly drawn for $2,111 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 $2,073.
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 $1,600 note for Chavez Company by the bank. The collection is not yet recorded.

2. Prepare journal entries to adjust the book balance of cash to the reconciled balance. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Journal entry worksheet

Note: Enter debits before credits.

	Date General Journal Debit Credit Sept 30 No journal entry required

Journal entry worksheet

Note: Enter debits before credits.

	Date General Journal Debit Credit Sept 30 Cash 23 Interest earned 23

Answer 1

Solution 1:

Chavez Company
Bank Reconciliation - September 30
Bank's Cash balance			Company's cash balance
Particulars		Amount	Particulars		Amount
Bank statement balance		$18,388.00	Book balance		$17,464.00
Additions:			Additions:
Deposit of Sept 30	$1,782.00		Proceeds of note	$1,600.00
			Interest earned	$23.00
		$1,782.00			$1,623.00
		$20,170.00			$19,087.00
Deductions:			Deductions:
Check no 5893	$480.00		NSF Cheque	$678.00
Check no 5906	$967.00		Error (check 5904)	$38.00
Check no 5908	$352.00
		$1,799.00			$716.00
Up to date cash balance as per bank		$18,371.00	Up to date cash balance as per books		$18,371.00

Solution 2:

Journal Entries - Chavez Company
S. No.	Particulars	Debit	Credit
1	No Journal Entry Required
2	Cash A/c Dr	$23.00
	To Interest Revenue		$23.00
	(Being interest credited by bank)
3	Cash A/c Dr	$1,600.00
	To Notes Receivables		$1,600.00
	(Being note collected by bank)
4	No Journal Entry Required
5	Accounts Receivables Dr	$678.00
	To Cash		$678.00
	(Being cheque dishonored by bank)
6	Computer Equipment Dr	$38.00
	To Cash		$38.00
	(Being entry recorded with short amount now corrected)