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 $1,080 and No. 5893 for $519. Check No. 5893 was still outstanding as of September 30. The following information is available for its September 30 reconciliation.

From the September 30 Bank Statement

PREVIOUS BALANCE	TOTAL CHECKS AND DEBITS	TOTAL DEPOSITS AND CREDITS	CURRENT BALANCE
17,000	9,915	11,892	18,977

CHECKS AND DEBITS					DEPOSITS AND CREDITS
Date	No.	Amount			Date	Amount
09/03	5888	1,080			09/05	1,203
09/04	5902	753			09/12	2,263
09/07	5901	1,837			09/21	4,450
09/17		698	NSF		09/25	2,364
09/20	5905	947			09/30	22	IN
09/22	5903	369			09/30	1,590	CM
09/22	5904	2,095
09/28	5907	257
09/29	5909	1,879

From Chavez Company’s Accounting Records

Cash Receipts Deposited
Date		Cash Debit
Sept.	5		1,203
	12		2,263
	21		4,450
	25		2,364
	30		1,751
			12,031

Cash Payments
Check No.		Cash Credit
5901			1,837
5902			753
5903			369
5904			2,054
5905			947
5906			953
5907			257
5908			385
5909			1,879
			9,434

Cash			Acct. No. 101
Date	Explanation	PR	Debit	Credit	Balance
Aug. 31	Balance				15,401
Sept. 30	Total receipts	R12	12,031		27,432
30	Total payments	D23		9,434	17,998

Additional Information

1. (a) Check No. 5904 is correctly drawn for $2,095 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 $2,054.
2. (b) 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.
3. (c) The credit memorandum (CM) is from the collection of a $1,590 note for Chavez Company by the bank. The collection is not yet recorded.

Required:
1. Prepare the September 30 bank reconciliation for this company.

Answer 1

CHAVEZ COMPANY
Bank Reconciliation
September 30
Bank statement balance		18977	Book balance		17998
Add:			Add:
Deposit of Sept. 30	1751		Interest earned	22
			Proceeds of note	1590
		1751			1612
		20728			19610
Deduct:			Deduct:
Check No. 5893	519		NSF check	698
Check No. 5906	953		Error (check 5904)	41
Check No. 5908	385
		1857			739
Adjusted bank balance		18871	Adjusted book balance		18871