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 \(1,028.05 and No. 5893 for \)494.25. The following information is available for its September 30, 2017, reconciliation.

From the September 30 Bank Statement 16,800.45 9,620.05 11,272.85 18,453.25 PREVIOUS BALANCE TOTAL CHECKS AND DEBITS TOTAL DEPOSITS AND CREDITS CURRENT BALANCE Date 09/03 09/04 09/07 09/20 09/17 09/22 09/22 09/28 09/29 CHECKS AND DEBITS DEPOSITS AND CREDITS 5888 1,028.05 09/05 1,103.75 No. Amount Date Amount 5902 719.90 09/12 2,226.90 5901 1,824.25 09/21 4,093.00 5905 937.00 09/30 12.50 IN 09/25 2,351.70 5903 399.10 09/30 1,485.00 CM 5904 5907 5909 2,090.00 213.85 1,807.65

From Chavez Company’s Accounting Records Cash Acct. No. 101 Date Explanation PR Debit Credit Balance Aug. 31 Balance 15,278.15 Sep. 30 Total receipts R12 11,458.10 26,736.25 30 Total disbursements D23 9,332.05 17,404.20 Cash Receipts Deposited Cash Date Debit Sep. 5 1,103.75 12 2,226.90 21 4,093.00 25 2,351.70 30 1,682.75 11,458.10 Cash Disbursements Check Cash No. Credit 5901 1,824.25 5902 719.90 5903 399.10 5904 2,060.00 5905 937.00 5906 982.30 5907 213.85 5908 388.00 5909 1,807.65 9,332.05

Additional Information

Check No. 5904 is correctly drawn for \(2,090 to pay for computer equipment; however, the recordkeeper misread the amount and entered it in the accounting records with a debit to Computer Equipment and a credit to Cash of \)2,060. 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 (CM) is from the collection of a \(1,500 note for Chavez Company by the bank. The bank deducted a \)15 collection expense. The collection and fee are not yet recorded.

Required

2. Prepare the journal entries (in dollars and cents) to adjust the book balance of cash to the reconciled balance.

Short answer

Answer

Interest earned $12.50 credited; Collection expense $15 debited; Notes receivable is credited by $1,500; Accounts receivable is debited by $600.25; and Computer equipment is debited by $30.

Step-by-step solution

Step-by-Step SolutionStep 1: Introduction to topic-

Bank Reconciliation Statement- A bank reconciliationis a process to reconcile the balances of an entity's accounting records with the bank statement balances, and for this reconciliation process, a statement is prepared called a bank reconciliation statement.

Journals-

Date	Transaction	Debit($)	Credit($)
Sept 30	No journal entry required
Sept 30	Cash	12.50
	Interest earned		12.50
	To record interest earned
Sept 30	Cash	1,485.00
	Collection expense	15.00
	Notes receivable		1,500.00
	To record notes receivables less collection expense
Sept 30	No journal entry required
Sept 30	Accounts receivable	600.25
	Cash		600.25
	To record the accounts receivable
Sept 30	Computer equipment	30.00
	Cash		30.00
	To computer equipment purchased