Question

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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 $1,040 and No. 5893 for $510. 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
18,000	9,890	11,547	19,657

CHECKS AND DEBITS					DEPOSITS AND CREDITS
Date	No.	Amount			Date	Amount
09/03	5888	1,040			09/05	1,157
09/04	5902	749			09/12	2,222
09/07	5901	1,860			09/21	4,172
09/17		679	NSF		09/25	2,312
09/20	5905	928			09/30	14	IN
09/22	5903	396			09/30	1,670	CM
09/22	5904	2,089
09/28	5907	268
09/29	5909	1,881

From Chavez Company’s Accounting Records

Cash Receipts Deposited
Date		Cash Debit
Sept.	5		1,157
	12		2,222
	21		4,172
	25		2,312
	30		1,796
			11,659

Cash Disbursements
Check No.		Cash Credit
5901			1,860
5902			749
5903			396
5904			2,051
5905			928
5906			1,045
5907			268
5908			382
5909			1,881
			9,560

Cash			Acct. No. 101
Date	Explanation	PR	Debit	Credit	Balance
Aug. 31	Balance				16,450
Sept. 30	Total receipts	R12	11,659		28,109
30	Total disbursements	D23		9,560	18,549

Additional Information
Check No. 5904 is correctly drawn for $2,089 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 $2,051. 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. The credit memorandum (CM) is from the collection of a $1,690 note for Chavez Company by the bank. The bank deducted a $20 collection expense. The collection and expense are not yet recorded.

Required:

1. Prepare the September 30 bank reconciliation for this company.

Answer 1

1)

Chavez Company
Bank reconciliations
September 30
BANK STATEMENT BALANCE		19,657	BOOK BALANCE		$18,549
Add:			Add:
Deposit of September 30	$1,796		Interest earned	$14
			Proceed of note less $20 fee	$1,670
		$1,796			$1,684
		$21,453			$20,233
Deduct:			Deduct:
Check No. 5893	$510		NSF check	$679
Check No. 5906	$1045		Error (check 5904) ($2089 - $2051)	$38
Check No. 5908	$382
		$1,937			$717
Adjusted Bank Balance		$19,516	Adjusted Book balance		$19,516