Question

On August 31, 2018, the general ledger of The Dean Acting Academy shows a balance for cash of $7,944. Cash receipts yet to be deposited into the checking account total $3,338, and checks written by the academy but not yet processed by the bank total $1,425. The company’s balance of cash does not reflect a bank service fee of $35 and interest earned on the checking account of $46. These amounts are included in the balance of cash of $6,042 reported by the bank as of the end of August. 1. Prepare a bank reconciliation to calculate the correct ending balance of cash on August 31, 2018 2. Record the necessary entry(ies) to adjust the balance for cash.

Answer 1

Explanation:

                                       The Dean Acting Academy

                                  Bank reconciliation statement    

                                                 August 31, 2018  

   

Particulars                 Amount           Particulars                    Amount

Bank cash balance $6,042          Company cash balance  $7,944

Deposits in transit         $3,338              Interest earned                $46

Less: Outstanding                                   Less: service fee            -$35

Check                            - $1,425

Bank balance                                          Company balance

After reconciliation $7,955             After reconciliation   $7,955

2. The adjusting entries are

Cash A/c Dr              $46

      To Interest revenue  $46

(Being the interest revenue is recorded)

Bank service fee expense A/c Dr $35

       To Cash A/c $35

(Being the service fee expense of bank is recorded)