On August 31 2019 the balance In the checkbook and the Cash

On August 31, 2019, the balance In the checkbook and the Cash account of the Dry Creek Bed and Breakfast was $12,192. Thee balance shown on the bank statement on the same date was $13147 Notes The firm\'s records Indicate that a $1,350 deposit dated August 30 and a $691 deposit dated August 31 do not appear on the bank statement. a. b. A service charge of $9 and a debit memorandum of $270 coverlng an NSF check have not yet been entered In the firm\'s records. The check was Issued by Art Corts, a credit customer) c. The following checks were Issued but have not yet been pald by the bank Check 712, $1ee Check 713, $115 Check 716, Check 736, $567 Check 739, 68 Check 741, $118 $228 d. A credit memorandum shows that the bank collected a $2,034 note recelvable and Interest of $53 for the firm. These amounts have not yet been entered In the firm\'s records. Requlred 1. Prepare a bank reconcillation statement for the firm as of August 31 2. Record general Journal entries for Items on the bank reconcillation statement that must be Journalized. Analyze: What effect did the Journal entries recorded as a result of the bank reconcililation have on the fundamental accounting equation?

Solution

DRY CREEK BED AND BREAKFAST Bank Reconciliation statement August 31,2019 $ $ Balance on the bank statement               13,147 Additions; Deposits on August 30             1,350 Deposits on August 31                691 Service charges                    9 Debit memorandum                270 Total additions             2,320 Deductions; Check issued but not cleared from the bank Check 712                100 Check 713                115 Check 716                228 Check 736                567 Check 739                  68 Check 741                110 Note receivable collected by the bank             2,034 Interest on note receivable                  53 Total deduction             3,275 Adjusted balance ($ 2,320 - $ 3,275 )                  (955) Balance in books               12,192 Journal entries in the books; Date Account\'s tittle Debit $ Credit $ Bank Charges ( $ 9 + $ 270 )                279 Cash                    279 ( Service charges and debit memorandum are booked) Cash ($ 2,034 + $ 53 )             2,087 Note receivable                 2,034 Interest income                      53