Question

Entries for bank reconciliation

The following data were accumulated for use in reconciling the bank account of Creative Design Co. for August 20Y6:
Cash balance according to the company's records at August 31, $15,610.
Cash balance according to the bank statement at August 31, $16,270.
Checks outstanding, $3,170.
Deposit in transit not recorded by bank, $2,540.
A check for $340 in payment of an account was erroneously recorded in the check register as $430.
Bank debit memo for service charges, $60.
Journalize the entries that should be made by the company that (a) increase cash and (b) decrease cash. If an amount box does not require an entry, leave it blank.
DateAccountDebitCredit
a. 20Y6 August 31



b. August 31

Answer 1

The journal entry will be

a. 20Y6 August 31

Date Account Debit Credit

20Y6 Aug 31 Cash (Deposit in transit) $2,540

20Y6 Aug 31 Accounts Receivable (Corrected check amount) $90

20Y6 Aug 31 Cash (Bank service charges) $60

b. August 31

Date Account Debit Credit

20Y6 Aug 31 Cash (Outstanding checks) $3,170

20Y6 Aug 31 Cash (Adjusted for bank statement) $2,540

20Y6 Aug 31 Accounts Receivable (Corrected check) $340

A journal entry is a record of a financial transaction in a business's accounting system. It is the first step in the accounting process and is used to capture and organize the financial effects of business transactions. The process of recording journal entries is known as journalizing.

A standard journal entry typically includes the following components:

Date: The date when the transaction occurred.

Account Titles: The names of the accounts affected by the transaction.

Debit (Dr): The amount recorded on the left side of the entry, which typically represents an increase in assets or expenses.

Credit (Cr): The amount recorded on the right side of the entry, which typically represents an increase in liabilities, equity, or revenue.