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.
\begin{matrix} \text{From the September 30 Bank Statement}\\ \text{PREVIOUS BALANCE} & \text{TOTAL CHECKS AND DEBITS} & \text{TOTAL DEPOSITS AND CREDITS} & \text{CURRENT BALANCE}\\ \text{16,800.45} & \text{9,620.05} & \text{11,272.85} & \text{18,453.25}\\ \end{matrix}
From the September 30 Bank Statement
PREVIOUS BALANCE
16,800.45
​
TOTAL CHECKS AND DEBITS
9,620.05
​
TOTAL DEPOSITS AND CREDITS
11,272.85
​
CURRENT BALANCE
18,453.25
​
\begin{matrix} \text{CHECKS AND DEBITS} & \quad & \quad & \text{ DEPOSITS AND CREDITS}\\ \text{Date} & \text{No} & \text{Amount} & \text{Date} & \text{Amount}\\ \text{09/03} & \text{5888} & \text{1,028.05} & \text{09/05} & \text{1,103.75}\\ \text{09/04} & \text{5902} & \text{719.90} & \text{09/12} & \text{2,226.90}\\ \text{09/07} & \text{5901} & \text{1,824.25} & \text{09/21} & \text{4,093.00}\\ \text{09/17} & \quad & \text{600.25 NSF} & \text{09/25} & \text{2,351.70}\\ \text{09/20} & \text{5905} & \text{937.00} & \text{09/30} & \text{12.50 IN}\\ \text{09/22} & \text{5903} & \text{399.10} & \text{09/30} & \text{1,485.00 CM}\\ \text{09/22} & \text{5904} & \text{2,090.00}\\ \text{09/28} & \text{5907} & \text{213.85}\\ \text{09/29} & \text{5909} & \text{1,807.65}\\ \end{matrix}
CHECKS AND DEBITS
Date
09/03
09/04
09/07
09/17
09/20
09/22
09/22
09/28
09/29
​
No
5888
5902
5901
5905
5903
5904
5907
5909
​
Amount
1,028.05
719.90
1,824.25
600.25 NSF
937.00
399.10
2,090.00
213.85
1,807.65
​
DEPOSITS AND CREDITS
Date
09/05
09/12
09/21
09/25
09/30
09/30
​
Amount
1,103.75
2,226.90
4,093.00
2,351.70
12.50 IN
1,485.00 CM
​
\begin{matrix} \text{From Chavez Company’s Accounting Records}\\ \text{Cash Receipts Deposited}\\ \text{Date} & \quad & \text{Cash Date Debit}\\ \text{Sep.} & \quad & \text{1,103.75}\\ \text{5} & \quad & \text{2,226.90}\\ \text{12} & \quad & \text{4,093.00}\\ \text{21} & \quad & \text{2,351.70}\\ \text{25} & \quad & \text{1,682.75}\\ \text{30} & \quad & \text{11,458.10}\\ \end{matrix}
From Chavez Company’s Accounting Records
Cash Receipts Deposited
Date
Sep.
5
12
21
25
30
​
​
Cash Date Debit
1,103.75
2,226.90
4,093.00
2,351.70
1,682.75
11,458.10
​
\begin{matrix} \text{From Chavez Company’s Accounting Records}\\ \text{Cash Disbursements}\\ \text{Check no.} & \quad & \text{Cash Credit}\\ \text{5901} & \quad & \text{1,824.25}\\ \text{5902} & \quad & \text{719.90}\\ \text{5903} & \quad & \text{399.10}\\ \text{5904} & \quad & \text{2,060.00}\\ \text{5905} & \quad & \text{937.00}\\ \text{5906} & \quad & \text{982.30}\\ \text{5907} & \quad & \text{213.85}\\ \text{5908} & \quad & \text{388.00}\\ \text{5909} & \quad & \text{1,807.65}\\ \quad & \quad & \text{9,332.05}\\ \end{matrix}
From Chavez Company’s Accounting Records
Cash Disbursements
Check no.
5901
5902
5903
5904
5905
5906
5907
5908
5909
​
​
Cash Credit
1,824.25
719.90
399.10
2,060.00
937.00
982.30
213.85
388.00
1,807.65
9,332.05
​
\begin{matrix} \quad & \text{Cash} & \quad & \quad & \quad & \text{Acct. No. 101}\\ \text{Date} & \text{Explanation} & \text{PR} & \text{Debit} & \text{Credit} & \text{Balance}\\ \text{Aug. 31} & \text{Balance} & \quad & \quad & \quad & \text{15,278.15}\\ \text{Sep. 30} & \text{Total receipts} & \text{R12} & \text{11,458.10} & \quad & \text{26,736.25}\\ \text{30} & \text{Total disbursements} & \text{D23} & \quad & \text{9,332.05} & \text{17,404.20}\\ \end{matrix}
Date
Aug. 31
Sep. 30
30
​
Cash
Explanation
Balance
Total receipts
Total disbursements
​
PR
R12
D23
​
Debit
11,458.10
​
Credit
9,332.05
​
Acct. No. 101
Balance
15,278.15
26,736.25
17,404.20
​
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. 1. Prepare the September 30, 2017, bank reconciliation for this company. 2. Prepare the journal entries (in dollars and cents) to adjust the book balance of cash to the reconciled balance. 3. The bank statement reveals that some of the prenumbered checks in the sequence are missing. Describe three situations that could explain this.
Solution
Verified