Question 2 Marin Inc.’s bank statement from Main Street Bank at August 31, 2017,

Question

Question 2

Marin Inc.’s bank statement from Main Street Bank at August 31, 2017, gives the following information.

A summary of the Cash account in the ledger for August shows the following: balance, August 1, $18,985; receipts $74,285; disbursements $73,495; and balance, August 31, $19,775. Analysis reveals that the only reconciling items on the July 31 bank reconciliation were a deposit in transit for $4,875 and outstanding checks of $4,575. In addition, you determine that there was an error involving a company check drawn in August: A check for $400 to a creditor on account that cleared the bank in August was journalized and posted for $40.

(A.)Determine deposits in transit.

(B.) Determine outstanding checks. (Hint: You need to correct disbursements for the check error.)

Outstanding checks =

(C.) Prepare a bank reconciliation at August 31. (List items that increase balance as per bank & books first.)

                                                             MARIN INC.
                                                    Bank Reconciliation

(D.)

Journalize the adjusting entries to be made by Marin Inc. at August 31. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Date

Account Titles and Explanation

Debit

Credit

(To record Interest earned)

(To correct error in recording check)

(To record service charge and safety deposit box fee)

Balance, August 1 $18,685 Bank debit memorandum: August deposits 71,285 Safety deposit box fee $ 100 Checks cleared in August 68,603 Service charge 125 Bank credit memorandum: Balance, August 31 21,262   Interest earned 120

Explanation / Answer

(C)

(D)

(A) Deposits in transit: Deposits per books in August 74285 Less: Deposits per bank in August 71285 Deposits in transit, July 31 -4875 August receipts deposited in August 66410 Deposits in transit, August 31 7875 (B) Outstanding checks: Checks per books in August ($73495-$40+$400) 73855 Less: Checks clearing bank in August 68603 Outstanding checks, July 31 -4575 August checks cleared in August 64028 Outstanding checks, August 31 9827

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