Question

Data Table a. The August 31 bank balance is $5,180. b. The bank statement includes two charges for NSF checks from customers. One is for $440 (#1), and the other is for $140 (#2). c. The following Wollaston Healthcare checks are outstanding at August 31: Check No. 237 Amount $ 90 288 140 291 550 294 630 295 50 296 50 d. Wollaston collects from a few customers by EFT. The August bank statement lists a $1,600 EFT deposit for a collection on account. The bank statement includes two special deposits that Wollaston hasn't recorded yet: $700 for dividend revenue, and $60 for the interest revenue Wollaston earned on its bank balance during August. f. The bank statement lists a $80 subtraction for the bank service charge. g. On August 31, the Wollaston treasurer deposited $330, but this deposit does not appear on the bank statement. h. The bank statement includes a $400 deduction for a check drawn by Multi-State Freight Company. Wollaston notified the bank of this bank error. i. Wollaston's Cash account shows a balance of $2,700 on August 31.

Answer 1

SOLUTION

1. Bank reconciliation statement-

Particulars	Amount ($)	Amount ($)
Bank
Balance as on August 31, 2018		5,180
Add: Deposits in transit	330
Bank error	400	730
		5,910
Less: Outstanding checks
Check no. 237	90
Check no. 288	140
Check no. 291	550
Check no. 294	630
Check no. 295	50
Check no. 296	50	(1,510)
Adjusted bank balance		4,400
Book
Balance as on August 31, 2018		2,700
Add: EFT collection	1,600
Dividend revenue	700
Interest revenue	60	2,360
		5,060
Less: NSF check 1	440
NSF check 2	140
Service charge	80	(660)
Adjusted book balance		4,400

2. Journal entries

Date	Accounts and Explanation	Debit ($)	Credit ($)
Aug.31	Cash	1,600
	Accounts receivable		1,600
	(To record cash received)
Aug.31	Cash	700
	Dividend		700
	(To record dividend received)
Aug.31	Cash	60
	Interest		60
	(To record interest received)
Aug.31	Accounts receivable	580
	Cash (440+140)		580
	(To record NSF checks recorded)
Aug.31	Bank charges	80
	Cash		80
	(To record bank charges)