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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 $1,084 and No. 5893 for $498. 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
17,500	9,913	11,455	19,042

CHECKS AND DEBITS					DEPOSITS AND CREDITS
Date	No.	Amount			Date	Amount
09/03	5888	1,084			09/05	1,117
09/04	5902	765			09/12	2,278
09/07	5901	1,865			09/21	4,134
09/17		674	NSF		09/25	2,384
09/20	5905	930			09/30	22	IN
09/22	5903	360			09/30	1,520	CM
09/22	5904	2,082
09/28	5907	267
09/29	5909	1,886

From Chavez Company’s Accounting Records

Cash Receipts Deposited
Date		Cash Debit
Sept.	5		1,117
	12		2,278
	21		4,134
	25		2,384
	30		1,741
			11,654

Cash Payments
Check No.		Cash Credit
5901			1,865
5902			765
5903			360
5904			2,037
5905			930
5906			1,020
5907			267
5908			394
5909			1,886
			9,524

Cash			Acct. No. 101
Date	Explanation	PR	Debit	Credit	Balance
Aug. 31	Balance				15,918
Sept. 30	Total receipts	R12	11,654		27,572
30	Total payments	D23		9,524	18,048

Additional Information

1. (a) Check No. 5904 is correctly drawn for $2,082 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 $2,037.
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 $1,520 note for Chavez Company by the bank. The collection is not yet recorded.
   Required: 1. Prepare the September 30 bank reconciliation for this company. CHAVEZ COMPANY Bank Reconciliation September 30 Book balance Add: Bank statement balance Add: Deduct: Deduct: Adjusted bank balance Adjusted book balance
   

Answer 1

Solution:

Chavez Company
Bank Reconciliation - September 30
Bank's Cash balance		Company's cash balance
Particulars	Amount	Particulars	Amount
Ending balance as per Bank Statements	$19,042.00	Ending Balance as per cash books	$18,048.00
Additions:		Additions:
Outstanding cash receipt	$1,741.00	Note Collection	$1,520.00
		Interest earned	$22.00
Deductions:		Deductions:
Outstanding Checks (Check no 5893, 5906 and 5908)	$1,912.00	NSF Cheque	$674.00
		Incorrect recording of cheque ($2,082 - $2,037)	$45.00
Adjusted bank balance	$18,871.00	Adjusted Cash balance	$18,871.00