Daytona Recycling Center reports the following information concerning cash balances
and cash transactions for the month of September:
1. Cash balance per bank statement as of September 30 was $20,893.25.
2. Two debit memoranda accompanied the bank statement: one for $10 was for
service charges for the month; the other for $64.60 was attached to an NSF check from
A. Smith.
3. Included with the bank statement was $69 credit memorandum for interest earned
on the bank account in September.
4. The paid checks returned with the September bank statement disclosed an error in
Daytona’s cash records. Check no. 851 for $77.44 for telephone expense had
erroneously been listed in the cash payments journal as $44.77.
5. A collection charge for $26.00 (not applicable to Daytona) was erroneously
deducted from the account by the bank. Notice that this was the bank’s error.
6. Cash receipts of September 30 amounting to $585.25 were mailed to the bank too
late to be included in the September bank statement.
7. Checks outstanding as of September 30 were as follows: no. 860 for $151.93, no.
867 for $82.46, and no. 869 for $123.61.
8. The cash account showed the following entries during September.
CASH
Balance
18,341.82
Month’s receipts
14,441.58
Month’s payments
a. Prepare a bank reconciliation at September 30.
b. Prepare the necessary adjusting entries in general journal form.
11,598.63
a.
DAYTONA RECYLING CENTER
BANK RECONCILIATION
September 30
Balance per bank statement, September 30
Add: Deposit in transit
Error Correction
Subtotal
Less: Outstanding checks:
no. 860
no. 867
no. 869
Total outstanding checks
Adjusted cash balance per bank statement
Balance per accounting records
Add: Interest Earned
Subtotal
Less: NSF check returned
Bank service charges
Error Correction
$
$
$
20,893.25
$
611
21,504.25
$
(358)
21,146.25
585
26
151.93
82.46
123.61
$
$
$
64.60
10
32.67
211,84.77
69
21,253.77
(107.27)
Adjusted balance per accounting records
$
21,146.25
b.
General Journal
July
31
Cash at Bank
Interest Revenue
Accounts Receivable
Cash at Bank
Service Charge Expense
Cash at Bank
Telephone Expense
Cash at Bank
69
69
64.60
64.60
10
10
32.67
32.67