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ID: 2582012 • Letter: C

Question

cure https://newconnect.mheducation.com/flow/connect.html Help Seve & Exit Submit Check my weark On August 31, 2019, the balance in the checkbook and the Cash account of the Dry Creek Bed and Breakfast was $12.308. The balance shown on the bank statement on the same date was $13.212 Notes a. The firm's records indicate that a $1,480 deposit dated August 30 and a $704 deposit dated August 31 do not appear on the bank statement. b. A service charge of $8 and a debit memorandum of $335 covering an NSF check have not yet been entered in the firm's records c. The following checks were issued but have not yet been paid by the bank: (The check was issued by Art Corts, a credit customer) Check 712, $113 Check 713, $128 Check 716, $241 Check 739, 81 Check 741, $123 d. A credit memorandum shows that the bank collected a $2.099 note receivable and interest of $66 for the frm. 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 i for items on the bank reconcilation statement that must be journalized

Explanation / Answer

Part 1

Bank Reconciliation Statement:

Particulars

Amount(USD)

Balance as per cash book

12308

Less: amount deposited but not reflecting in bank(1480+704)

(2184)

Less: amount charged by bank but not entered in firm’s books(8+335)

(343)

Add: cheque issued but not paid((113+128+241+580+81+123)

1266

Add: Amount credited in bank but not recorded in firm’s books(2099+66)

2165

Balance as per bank

13212

Part 2

Journal

a. Deposit of 1480 and 704. No Journal entry required because there is a pendency at the end of bank. Firm’s books are correct in this regard. Bank will update this entry as per normal working cycle(usually 2 days)

Service Charge Account Dr. 8

NSF payment account Dr. 335

To Bank Account 343

(being expense recorded in firm’s books)

C. No Journal entry required for cheque issued but not paid because there is a pendency at the end of bank. Firm’s books are correct in this regard. Bank will update this entry as per normal working cycle(usually 4 days)

This entry need to be revered if there is any cheque which was not presented and time limit expired or if cheque is cancelled.

Bank Account Dr. 2165

To interest (Income) 66

To Note receivable 2099

(being amount received towards interest and note rec.)

Thanks.