On August 31, 2019, the balance in the checkbook and the Cash account of the Dry Creek Bed and Breakfast was $12,316. The balance shown on the bank statement on the same date was $13,217. Notes The firm’s records indicate that a $1,490 deposit dated August 30 and a $705 deposit dated August 31 do not appear on the bank statement. A service charge of $7 and a debit memorandum of $340 covering an NSF check have not yet been entered in the firm’s records. (The check was issued by Art Corts, a credit customer.) The following checks were issued but have not yet been paid by the bank: Check 712, $ 114 Check 713, $ 129 Check 716, $ 242 Check 736, $ 581 Check 739, $ 82 Check 741, $ 124 A credit memorandum shows that the bank collected a $2,104 note receivable and interest of $67 for the firm. These amounts have not yet been entered in the firm’s records. Required: Prepare a bank reconciliation statement for the firm as of August 31. 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?

Century 21 Accounting Multicolumn Journal

11th Edition

ISBN:9781337679503

Author:Gilbertson

Publisher:Gilbertson

Chapter5: Cash Control Systems

Section: Chapter Questions

Problem 2AP

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Question

On August 31, 2019, the balance in the checkbook and the Cash account of the Dry Creek Bed and Breakfast was $12,316. The balance shown on the bank statement on the same date was $13,217.

Notes

The firm’s records indicate that a $1,490 deposit dated August 30 and a $705 deposit dated August 31 do not appear on the bank statement.
A service charge of $7 and a debit memorandum of $340 covering an NSF check have not yet been entered in the firm’s records. (The check was issued by Art Corts, a credit customer.)
The following checks were issued but have not yet been paid by the bank:


Check 712,	$	114
Check 713,	$	129
Check 716,	$	242
Check 736,	$	581
Check 739,	$	82
Check 741,	$	124

A credit memorandum shows that the bank collected a $2,104 note receivable and interest of $67 for the firm. These amounts have not yet been entered in the firm’s records.

Required:

Prepare a bank reconciliation statement for the firm as of August 31.
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?

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