Question

On August 31, 2021, the general ledger of The Dean Acting Academy shows a balance for cash of $7,874. Cash receipts yet to be deposited into the checking account total $3,268, and checks written by the academy but not yet processed by the bank total $1,355. The company's balance of cash does not reflect a bank service fee of $28 and interest earned on the checking account of $39. These amounts are included in the balance of cash of $5,972 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, 2021.2. Record the necessary entry(ies) to adjust the balance for cash.

Answer 1

Bank Reconciliation Statement

Balance at bank as per the Cash Book (updated) $7,885

Add Unpresented Cheques $1,355

Less Bank Lodgements not yet credited ($3,268)

Balance as per bank statement $5,972

J1

Bank $39 (debit)

Interest Earned $39 (credit)

J2

Bank service fee $28 (debit)

Bank $28 (credit)

Step-by-step explanation:

Step 1 Bring the Cash Balance in the Cash Book up to date

Debit :

Balance as at August 31, 2021, $7,874

Interest Earned $39

Totals $7,913

Credit:

Bank service fee $28

Balance Up dated (Balancing figure) $7,885

Totals $7,913

Step 2 Prepare the Bank Reconciliation Statement

Bank Reconciliation Statement

Balance at bank as per the Cash Book (updated) $7,885

Add Unpresented Cheques $1,355

Less Bank Lodgements not yet credited ($3,268)

Balance as per bank statement $5,972