Question

On March 31, 2019, Home Decorating Pavilion received a bank statement showing a balance of $9,800. The balance in the firm's checkbook and Cash account on the same date was $10,370. The difference between the two balances is caused by the items listed below. a. A $2,925 deposit made on March 30 does not appear on the bank statement. b. Check 358 for $510 issued on March 29 and Check 359 for $1,700 issued on March 30 have not yet been paid by the bank. c. A credit memorandum shows that the bank has collected a $1,100 note receivable and interest of $110 for the firm. d. A service charge of $30 appears on the bank statement. e. A debit memorandum shows an NSF check for $550. (The check was issued by Dane Jaris, a credit customer.) f. The firm's records indicate that Check 341 of March 1 was issued for $700 to pay the month's rent. However, the canceled check and the listing on the bank statement show that the actual amount of the check was $600. g. The bank made an error by deducting a check for $585 issued by another business from the balance of Home Decorating Pavilion's account. Required: 1. Prepare a bank reconciliation statement for the firm as of March 31, 2019. 2. Record entries for any items on the bank reconciliation statement that must be journalized.

Answer 1

1.

HOME DECORATING PAVILION
Bank Reconciliation
Mar-19
Balance on bank statement		9,800
Additions:
Deposit in transit	2,925
Correction of bank error	585
		3,510
Deductions for outstanding checks:
358	-510
359	-1,700
		-2,210
Adjusted bank balance		$11,100
Balance in books		10,370
Additions:
Note receivable collected by bank	1,100
Interest revenue	110
Correction of book error	100
		1,310
Deductions:
Bank service charges	-30
NSF Check	-550
		-580
Adjusted balance		$11,100

2.

Date	General Journal	Debit	Credit
March 31, 2019	Cash	$1,210
	Note receivable		$1,100
	Interest revenue		$110
	( To record note receivable and interest revenue collected by bank)

Date	General Journal	Debit	Credit
March 31, 2019	Cash	$100
	Rent expense		$100
	( To record correct book error)

Date	General Journal	Debit	Credit
March 31, 2019	Accounts receivable - Dane Jaris	$550
	Cash		$550
	( To record NSF check)

Date	General Journal	Debit	Credit
March 31, 2019	Miscellaneous expense	$30
	Cash		$30
	( To record service charges)

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