On August 31, 2019, the balance in the checkbook and the Cash account of the Dry

Question

On August 31, 2019, the balance in the checkbook and the Cash account of the Dry Creek Bed and Breakfast was S12 balance shown on the bank statement on the same date was $13,247 Notes a. The firm's records indicate that a $1,550 deposit dated August 30 and a $711 deposit dated August 31 do not appear on the bank statement b. A service charge of $7 and a debit memorandum of $370 covering an NSF check have not yet been entered in the firm's records. (The check was issued by Art Corts, a credit customer.) c. The following checks were issued but have not yet been paid by the bank Check 712, $120 Check 713, $135 Check 716, $248 Check 736, $587 check 739, $88 Check 741, $130 d. A credit memorandum shows that the bank collected a $2134 note recelvable and interest of $73 for the firm. These amounts have not yet been entered in the firm's records. Required: 1. Prepare a bank reconciliation statement for the firm as of August 31. 2. Record general journal entries for items on the bank reconciliation statement that must be journalized Analyze: What effect did the journal entries recorded as a result of the bank reconciliation have on the fundamental accounting equation? Complete this question by entering your answers in the tabs below General Journal Bank Rec Analyze Prepare a bank reconcillation statement for the firm as of August 31 AND BREAKF

Explanation / Answer

1 DRY CREEK BED AND BREAKFAST BANK RECONCILIATION STATEMENT 31-Aug-19 Balance on bank statement $13,247 Additions: Check deposit but not cleared(1550+711) $2,261 Service Charge $7 Debit memorandum - NSF Check $370 Deductions Check issued but not cleared(120+135+248+587+88+130) $1,308 Note Receivable $2,134 Interest $73 Total deductions $3,515 Adjusted Bank Balances $12,370 Balance in Books $12,370 Additions: Check issued but not cleared(120+135+248+587+88+130) $1,308 Note Receivable $2,134 Interest $73 Deductions: Check deposit but not cleared(1550+711) $2,261 Service Charge $7 Debit memorandum - NSF Check $370 Adjusted book balance $13,247 2 Record the deposit in transit Date General Journal Debit Credit 31-Aug-19 No Entry required Adjustment already made in the books of accounts Record the bank service fee Date General Journal Debit Credit 31-Aug-19 Bank Service fee $7 To Cash/Checkbook $7 Record the returned check Date General Journal Debit Credit 31-Aug-19 Accounts Receivable $370 To Cash/Checkbook $370 Record the outstanding checks No Entry Required Adjustment already made in the books of accounts Record the note collected by the bank plus interest Cash/Checkbook $2,207 To Notes Receivable $2,134 To Interest $73 What effect did the journal entries recorded as a result of the bank reconciliation have on the fundamental accounting equation Net Effect Increase by $66 (73-7)

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