Question

On August 31, 2019, the balance in the checkbook and the Cash account of the Dry Creek Bed and Breakfast was $12,370. The balance shown on the bank statement on the same date was $13,247.

Notes

1. The firms records indicate that a $1,550 deposit dated August 30 and a $711 deposit dated August 31 do not appear on the bank statement.
2. A service charge of $7 and a debit memorandum of $370 covering an NSF check have not yet been entered in the firm’s records. (The check was issued by Art Corts, a credit customer.)
3. The following checks were issued but have not yet been paid by the bank:
   

Check 712,	$	120
Check 713,	$	135
Check 716,	$	248
Check 736,	$	587
Check 739,	$	88
Check 741,	$	130

4. A credit memorandum shows that the bank collected a $2,134 note receivable and interest of $73 for the firm. These amounts have not yet been entered in the firm’s records.
   

Required:

1. Prepare a bank reconciliation statement for the firm as of August 31.
2. Record general journal entries for items on the bank reconciliation statement that must be journalized.
   

Analyze:
What effect did the journal entries recorded as a result of the bank reconciliation have on the fundamental accounting equation?

Answer 1

Dry Creek Bed and Breakfast
Bank Reconciliation Statement
August 31,2019
Balance on bank statement					13,247
Addittions:
Deposit of August 30 in transit				1,550
Deposit of august 31 in transit				711
					2,261
					15,508
Deductions:
check 712				120
check 713				135
check 716				248
check 736				587
check 739				88
check 741				130
total deductions					1308
Adjusted bank balance					14,200
Balance in books					12,370
Addittions:
note receivable collected by bank				2,134
interest on note receivable				73
					2,207
					14,577
Deductions:
Bank service charge				7
NSF Check from Arts Corts				370
					377
Adjusted book balance					14,200
Journal Entries
Date	General Journal				Debit	Credit
8/31/2019	No entry
	(deposit in transit)
8/31/2019	Bank service charge/Misc expense				7
	cash					7
8/31/2019	Account receivable				370
	cash					370
8/31/2019	no entry
	(outstanding checks)
8/31/2019	Cash				2,207
	note receivable					2,134
	interest income					73
Net Effect	increase	by	66
	Assets	=	liabilities	+	Equity
	-7				-7
	370
	-370
	2207				73
	-2134
	66				66