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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 $1,081 and No. 5893 for $495. 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	9,889	11,573	19,184

CHECKS AND DEBITS					DEPOSITS AND CREDITS
Date	No.	Amount			Date	Amount
09/03	5888	1,081			09/05	1,115
09/04	5902	700			09/12	2,260
09/07	5901	1,895			09/21	4,342
09/17		653	NSF		09/25	2,304
09/20	5905	902			09/30	12	IN
09/22	5903	423			09/30	1,540	CM
09/22	5904	2,109
09/28	5907	244
09/29	5909	1,882

From Chavez Company’s Accounting Records

Cash Receipts Deposited
Date		Cash Debit
Sept.	5		1,115
	12		2,260
	21		4,342
	25		2,304
	30		1,678
			11,699

Cash Payments
Check No.		Cash Credit
5901			1,895
5902			700
5903			423
5904			2,065
5905			902
5906			986
5907			244
5908			441
5909			1,882
			9,538

Cash			Acct. No. 101
Date	Explanation	PR	Debit	Credit	Balance
Aug. 31	Balance				15,924
Sept. 30	Total receipts	R12	11,699		27,623
30	Total payments	D23		9,538	18,085

Additional Information

1. (a) Check No. 5904 is correctly drawn for $2,109 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 $2,065.
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 $1,540 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.)

Answer 1

Chavez Company Bank Reconciliation September 30, Bank statement balance Add: Deposit of Sept. 30 18085 1678 1540 19184 Book balance Add: Interest earned 1678 Proceeds of note 20862 Deduct: NSF check Error (check 5904) 1552 19637 653 Deduct: Check No. 5893 Check No. 5906 Check No. 5908 495 986 441 44 697 1922 18940 Adjusted bank balance Adjusted bank balance 18940 Journal Enteries Date Particulars Sep-30 No journal entry required Debit in $ Credit in $ Sep-30 12 Cash a/c Dr. To Interest earned 12 1540 Sep-30 Cash a/c Dr. To Notes receivable 1540 Sep-30 No journal entry required 653 Sep-30 Accounts receivable-S.Nilson To Cash 653 44 Sep-30 Computer equipment a/c To Cash 44