Chavez Company most recently reconciled its bank statement and book balances of
ID: 2554294 • Letter: C
Question
Chavez Company most recently reconciled its bank statement and book balances of cash on August 31 and it reported two checks outstanding, No. 5888 for $1,023 and No. 5893 for $512. The following information is available for its September 30, 2017, reconciliation.
From the September 30 Bank Statement
PREVIOUS BALANCE
TOTAL CHECKS AND DEBITS
TOTAL DEPOSITS AND CREDITS
CURRENT BALANCE
18,000
9,862
11,530
19,668
CHECKS AND DEBITS
DEPOSITS AND CREDITS
Date
No.
Amount
Date
Amount
09/03
5888
1,023
09/05
1,189
09/04
5902
736
09/12
2,263
09/07
5901
1,853
09/21
4,108
09/17
637
NSF
09/25
2,390
09/20
5905
959
09/30
15
IN
09/22
5903
369
09/30
1,565
CM
09/22
5904
2,124
09/28
5907
279
09/29
5909
1,882
From Chavez Company’s Accounting Records
Cash Receipts Deposited
Date
Cash
Debit
Sept.
5
1,189
12
2,263
21
4,108
25
2,390
30
1,704
11,654
Cash Disbursements
Check No.
Cash
Credit
5901
1,853
5902
736
5903
369
5904
2,085
5905
959
5906
1,030
5907
279
5908
428
5909
1,882
9,621
Cash
Acct. No. 101
Date
Explanation
PR
Debit
Credit
Balance
Aug. 31
Balance
16,465
Sept. 30
Total receipts
R12
11,654
28,119
30
Total disbursements
D23
9,621
18,498
Additional Information
Check No. 5904 is correctly drawn for $2,124 to pay for computer equipment; however, the recordkeeper misread the amount and entered it in the accounting records with a debit to Computer Equipment and a credit to Cash of $2,085. The NSF check shown in the statement was originally received from a customer, S. Nilson, in payment of her account. Its return has not yet been recorded by the company. The credit memorandum is from the collection of a $1,590 note for Chavez Company by the bank. The bank deducted a $25 collection fee. The collection and fee are not yet recorded.
· Record the entry related to the September 30 deposit, if required.
Note: Enter debits before credits.
Date
General Journal
Debit
Credit
Sept 30
· Record the entry related to interest earned, if required.
Note: Enter debits before credits.
Date
General Journal
Debit
Credit
Sept 30
· Record the entry related to the note receivable and the collection fee, if required.
Note: Enter debits before credits.
Date
General Journal
Debit
Credit
Sept 30
· Record the entry related to the outstanding checks, if required.
Note: Enter debits before credits.
Date
General Journal
Debit
Credit
Sept 30
Record the entry related to the NSF check, if required. Note: Enter debits before credits.
Date
General Journal
Debit
Credit
Sept 30
· Record the entry related to the error on check 5904, if required.
Note: Enter debits before credits.
Date
General Journal
Debit
Credit
Sept 30
1. Prepare the September 30, 2017, bank reconciliation for this company.
HAVEZ COMPANY
Bank Reconciliation
September 30, 2017
Bank statement balance
Book balance
Add:
Add:
Deduct:
Deduct:
Adjusted bank balance
Adjusted book balance
Record the entry related to the September 30 deposit, if required.
Record the entry related to interest earned, if required.
Record the entry related to the note receivable and the collection fee, if required.
· Record the entry related to the outstanding checks, if required.
Record the entry related to the NSF check, if required.
Record the entry related to the error on check 5904, if required.
PREVIOUS BALANCE
TOTAL CHECKS AND DEBITS
TOTAL DEPOSITS AND CREDITS
CURRENT BALANCE
18,000
9,862
11,530
19,668
Explanation / Answer
Solution :
Chavez Company Bank Reconciliation - September 30 Bank's Cash balance Company's cash balance Particulars Amount Particulars Amount Ending balance as per Bank Statements $19,668.00 Ending Balance as per cash books $18,498.00 Additions: Additions: Outstanding cash receipt $1,704.00 Note Collection $1,565.00 Interest earned $15.00 Deductions: Deductions: Outstanding Checks ($1030 + $428 +$512) $1,970.00 NSF Cheque $637.00 Incorrect recording of cheque ($2,124 - $2,085) $39.00 Up to date cash balance as per bank $19,402.00 Up to date cash balance as per books $19,402.00