Question

Mark Smith Company operates four bowling alleys. The business just received the October 31​, 2018​, bank statement from City National​ Bank, and the statement shows an ending balance of $ 895. Listed on the statement are an EFT rent collection of $ 435​, a service charge of $ 6​, NSF checks totaling $ 45​, and a $ 30 charge for printed checks. In reviewing the cash​ records, the business identified outstanding checks totaling $ 460 and a deposit in transit of $ 1795. During October​, the business recorded a $ 230 check by debiting Salaries Expense and crediting Cash for $ 23. The​ business's Cash account shows an October 31 balance of $2083.

Prepare the bank reconciliation at October 31,2018

with journal entries for

1 Begin with the EFT collection

2. Journalize the entry to correct the error.

3. Journalize the adjustment for the NSF check.

4. Journalize the charge for printed checks. ​(Do not record the bank service​ charges, that will be done in the next step. Assume the cost of printed checks is a bank​ expense.)

5. Journalize the service charges.

Answer 1

Mark Smith Company
Bank Reconciliation
October 31, 2018
Balance as per bank statement		895
Add:
Deposit in transit		1795
		2690
Less:
Outstanding checks		460
Adjusted balance as per bank statement		2230
Balance as per books		2083
Add:
EFT rent collection		435
		2518
Less:
Service charge	6
NSF checks	45
Check printing charge	30
Error in recording check ($230 - $23)	207	288
Adjusted balance as per books		2230

No.	Date	General Journal	Debit	Credit
1	Oct. 31	Cash	435
		Rent revenue		435
		(To record EFT rent collection by bank)
2	Oct. 31	Salaries expense	207
		Cash		207
		(To rectify error in recording check)
3	Oct. 31	Accounts receivable	45
		Cash		45
		(To record NSF checks)
4	Oct. 31	Bank expense	30
		Cash		30
		(To record check printing charges)
5	Oct. 31	Miscellaneous expense	6
		Cash		6
		(To record service charges)