Question

Internal Cod Learning Objective PS-27A Preparing a bank reconciliation and journal entries The Decembarcach w Duben ce for 1. Adjusted Balance $18.00 Cash Receipts Cash Payments Date Cash Debit Check No Cash Credit Dec 4 $4200 $310 500 1418 1.900 1419 1420 Davidson Cash account shows a balance of $17,450 at December 31. On December 31. Davidson Insurance received the following bank stanement $ 14,100 Bank Statement for December Beginning Balance Deposits and other Credits De 1 EFT 350 Der 5 Dec 10 Dec 15 Dec 18 1.900 Dec 22 SC 1.400 Checks and other Debits Dec 3 NSF 400 Dec 11 (check no. 1416 3 10 De 19 FT 225 Dec 22 (check no. 1417) Dec 29 check no. 14180 Dec 31 check no 14190 1,930 Dec 31 Ending Balance Explanations-bank collection: ET-lectronic fundistanter, NS-conficient funds check C- vice charge Additional data for the bank conciliation follow The EFT credit was receipt of rent. The EFT debut was an insurance payment b. The NSF check was received from a customer 6. The $1.00 bank collection was for not receivable. d. The correct to check 1419, for expenses $1,930. David contr owyconethe check for $1,390 CHAPTER 3 Requirements 1. Prepare the bank reconciliation of Davidson Insurance at December 31, 2018 2. Journaline any required entries from the bank reconciliation

Answer 1

Solution 1:

Davidson insurance
Bank Reconciliation - December 31
Bank's Cash balance		Company's cash balance
Particulars	Amount	Particulars	Amount
Ending balance as per Bank Statements	$18,955.00	Ending Balance as per cash books	$17,450.00
Additions:		Additions:
Outstanding Deposits	$1,860.00	Rent receipt	$350.00
		Note collection by bank	$1,400.00
Deductions:		Deductions:
Outstanding Checks	$2,790.00	Insurance expense	$225.00
		NSF Cheque	$400.00
		Service charge	$10.00
		Incorrect recording of check 1419	$540.00
Up to date cash balance as per bank	$18,025.00	Up to date cash balance as per books	$18,025.00

Solution 2:

Journal Entries - Davidson Insurance
Date	Particulars	Debit	Credit
31-Dec	Cash Dr	$1,750.00
	To Rent revenue		$350.00
	To Note receivables		$1,400.00
	(To reccord increase in cash from bank reconciliation)
31-Dec	Insurance expense	$225.00
	Accounts Receivables Dr	$400.00
	Miscellaneous expense Dr	$10.00
	Rent expense Dr	$540.00
	To Cash		$1,175.00
	(To reccord Decrease in cash from bank reconciliation)