Question

This information relates to the Cash account in the ledger of Sandhill Company.

          Balance September 1—$19,320; Cash deposited—$64,000
          Balance September 30—$20,520; Checks written—$62,800

The September bank statement shows a balance of $19,420 at September 30 and the following memoranda.

Credits				Debits
Collection of electronic funds transfer		$1,990		NSF check: H. Kane		$720
Interest earned on checking account		55		Safety deposit box rent		70

At September 30, deposits in transit were $4,908 and outstanding checks totaled $2,553.

Prepare the bank reconciliation at September 30, 2017. (List items that increase balance as per bank & books first.)

Prepare the adjusting entries at September 30, assuming the NSF check was from a customer on account. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Answer 1

Bank reconciliation :

Unadjusted balance as per Bank Statement	19420
Add: Deposit in transit	4908
	24328
Less: Outstanding check	-2553
Adjusted balance as per Cash book	21775
Unadjusted balance as per Cash book	20520
Add: Electronic fund transfer	1990
Add: Interest earned	55
	22565
Less: Safety box rent	-70
Less: NSF Check	-720
Adjusted balance as per Cash book	21775

Adjusting entries

Date	account and explanation	debit	credit
Sep 30	Cash	2045
	Account receivable		1990
	Interest revenue		55
	(To record collection)
Sep 30	Account receivable	720
	Safety box rent	70
	Cash		790
	(To record NSF Check and rent)