Preparing a bank reconciliation and journal entries [20 min]The August 31 bank statement o...

Preparing a bank reconciliation and journal entries [20 min]

The August 31 bank statement of Winchester’s Healthcare has just arrived from United Bank. To prepare the bank reconciliation, you gather the following data:

a. The August 31 bank balance is $4,870.

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b. The bank statement includes two charges for NSF checks from customers. One is for $400 (#1), and the other for $110 (#2).

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c. The following Winchester checks are outstanding at August 31:

Check No.	Amount
237	$      50
288	170
291	520
294	580
295	50
296	140

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d. Winchester collects from a few customers by EFT. The August bank statement lists a $1,300 EFT deposit for a collection on account.

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e. The bank statement includes two special deposits that Winchester hasn’t recorded yet: $970, for dividend revenue, and $80, the interest revenue Winchester earned on its bank balance during August.

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f. The bank statement lists a $30 subtraction for the bank service charge.

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g. On August 31, the Winchester treasurer deposited $350, but this deposit does not appear on the bank statement.

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h. The bank statement includes a $1,000 deduction for a check drawn by Multi-State Freight Company. Winchester notified the bank of this bank error.

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i. Winchester’s Cash account shows a balance of $2,900 on August 31.

Requirements

1. Prepare the bank reconciliation for Winchester’s Healthcare at August 31, 2012.

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2. Journalize any required entries from the bank reconciliation. Include an explanation for each entry.