Question

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 $1,019 and No. 5893 for $517. 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 16,500 TOTAL CHECKS AND DEBITS 9,718 TOTAL DEPOSITS AND CREDITS 11,479 CURRENT BALANCE 18, 261 CHECKS AND DEBITS Date No. Amount 09/03 5888 1,019 09/04 5902 711 09/07 5901 1,836 09/17 652 NSF 09/20 5905 928 09/22 5903 375 09/22 5904 2,065 09/28 5907 09/29 5909 1,864 DEPOSITS AND CREDITS Date Amount 09/05 1,141 09/12 2,228 09/21 4,135 09/25 2,376 09/30 19 IN 09/30 1,580 CM 268

Answer 1

Ajusting Entries: No. 1 Debit Credit Date Sep. 30 Account Titles and Explanation No Entry required [Ref: NOTE for the reason] Sep. 30 $19 $19 Sep. 30 Cash Interest Revenue (To record interest earned in bank account) Cash Note Recievable |(To record note collected by bank) No Entry required $1,580 $1,580 Sep. 30 [Ref: NOTE for the reason] Sep. 30 $652 $652 Accounts Receivable - S.Nilson Cash (To record NSF check returned by bank) Computer Equipment Cash |(To rectify error of recording pay Check No.5904) Sep. 30 $42 [$2,065 - $2,023] [It would have be recorded short in both heads earlier] $42

NOTE: Adjusting entries in company's books are required to be recorded only for those transactions that would affect company's book balance. In other words, those transactions that would affect bank records shall not to be recorded in company's books of accounts. So, outstanding checks and deposits in transit are not recorded in adjusting entries.