91Ó°ÊÓ

Preparing a bank reconciliation and journal entries

This problem continues the Crystal Clear Cleaning problem begun in Chapter 2 and

continued through Chapter 6.

In March 2019, Crystal Clear Cleaning opened a new checking account at First

Regional Bank. The bank statement dated March 31, 2019, for Crystal Clear

Cleaning follows:

Beginning Balance, March 1, 2019

Deposits and other credits:

Mar. 2

10

18

20

23 EFT Peg’s Restaurant(1)

(1) Peg’s Restaurant is a customer making a payment on account.

(3) Texas Energy is a utility provider.

(2) Check Art is a company that prints business checks (considered a

bank expense) for Crystal Clear Cleaning.

\(33,000

900

19,000

50,000

350

Checks and other debits:

Mar. 2 EFT to Check Art(2)

Ending balance, March 31, 2019

\) 0

31 Interest Revenue 50

5 Ck#235

9 Ck#237

9 Ck#236

26 Ck#239

10

2,400

1,500

2,900

2,000

28 EFT to Texas Energy(3) 130

29 Ck#240 300

31 Bank service charge 25

103,300

(9,265)

$ 94,035

Crystal Clear Cleaning’s Cash account in the general ledger shows the following

transactions for March:

Cash—First Regional Bank Checking Account

Balance

Deposit

Deposit

Deposit

Deposit

2,400

2,900

1,500

400

2,000

94,870

Mar. 2

10

18

20

31 Deposit

33,000

900

19,000

50,000

1,770

Mar. 2

4

5

10

21

Ck#235

Ck#236

Ck#237

Ck#238

Ck#239

300

300

23

29

Ck#240

Ck#241

Balance

Requirements

1. Prepare the bank reconciliation at March 31, 2019.

2. Journalize any required entries from the bank reconciliation. Post to the CashT-account to verify the balance of the account matches the adjusted book balancefrom the bank reconciliation.

Step by step solution

01

Definition of bank reconciliation statement

The bank reconciliation statement is the statement prepared to remove the errors of bank balance and cash book balance.

02

Bank reconciliation statement

Crystal Clear Cleaning
Bank Reconciliation Statement
March 31, 2019
Bank Side		Book Side
Particulars	Amount	Particulars	Amount
Balance as per bank	$94,035	Balance as per cash book	$94,870
Add:		Add:
Outstanding Deposits	$1,770	Interest Revenue	$50
		EFT Collection	$350
Deductions:		Deductions:
Outstanding Checks	$700	Utility Expense	$130
		Bank Expense	$10
		Service Charge	$25
Adjusted Balance on October 31	$95,105	Adjusted Balance on October 31	$95,105

In the bank reconciliation statement, the opening balance as per bank and cashbook is $94,035 and $94,870. You add the outstanding deposit and deduct the outstanding checks to find the adjusted balance on the bank side. You add rent receipts and note collection to the book balance on the book side. After this, you deduct the NSF check, incorrect recording of the check, EFT payment, and service charge. After making these adjustments on both sides, you got the adjusted balance of $95,105.

03

Journal Entries

Date	Particulars	Debit	Credit
March 31	Cash	$50
	Interest Revenue		$50
	(To record the interest revenue)
March 31	Bank Expense	$10
	Cash		$10
	(To record NSF Check)
March 31	Cash	$350
	Accounts Receivable		$350
	(To record the receipt of account receivable)
March 31	Bank Charges	$25
	Cash		$25
	(To record the payment of bank charges)
March 31	Utilities Expense	$130
	Cash		$130

The first and the second entry is passed to interest revenue.

The third entry is passed on record as the bank expense

The fourth entry is given on recording the collection accounts receivable.

The fifth entry is passed on recording the payment of bank charges.

04

Cash T-account

Cash
Opening Balance	$94,870	Utilities Expense	$130
Interest Revenue	$50	Bank expense	$10
Account Receivable	$350	Service Charges	$25
Adjusted Balance of Cash	$95,10

Hence, the adjusted balance of the book side of the bank reconciliation statement is equal to the adjusted balance of the cash t-account.

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