Question

On August 31, 2021, the general ledger of The Dean Acting Academy shows a balance for cash of $7,764. Cash receipts yet to be deposited into the checking account total $3,158, and checks written by the academy but not yet processed by the bank total $1,245. The company's balance of cash does not reflect a bank service fee of $17 and interest earned on the checking account of $28. These amounts are included in the balance of cash of $5,862 reported by the bank as of the end of August.
Required:
1. Prepare a bank reconciliation to calculate the correct ending balance of cash on August 31, 2021. (Amounts to be deducted should be indicated with a minus sign.)
2. Record the necessary entry(ies) to adjust the balance for cash. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Answer 1

Answer:

1.

The Dean Acting Academy

Bank Reconciliation

August 31, 2021

Bank’s Cash Balance

Per bank statement $5,862

Deposits outstanding + 3,158

Checks outstanding −1,245

Bank balance per reconciliation $7,775

Company’s Cash Balance

Per general ledger $7,764

Service fees +17

Interest earned -28

Company balance per reconciliation $7,775

2.

Cash 28 (Debit)

Interest Revenue 28 (Credit)

(Record note and interest collected by bank)

Service Fee Expense 17 (Debit)

Cash 17 (Credit)

(Record bank service fee)

Answer 2

Answer:

1.Bank reconcilation statement for the month ended 31 August, 2021

Balance as per cash book $7764

Cash receipts undeposited ($3158)

Unprocessed Checks $1245

Bank fee ($17)

Interest earned $28

Balance as per bank statement $5862

2. Debit to receipts $3158

Credit to Cash $3158

Being adjustment for cash yet to be deposited

Debit to cash $1245

Credit to payments $1245

Being adjustment for unprocessed checks written

Debit to bank charge $17

Credit to cash/bank $17

Being bank service fee

Debit to cash/bank $28

Credit to interrst income $28

Being interest earned

Explanation: A bank reconcilation statement is a statement that states and aims to adjust the difference between the cash book balance and the bank statement balance.

This reconcilation statement recognises all unpresented checks, uncredited cheques, posting errors, bank charges and so on.