The bank statement for Wakiki, Inc. shows a balance of $9,140 on July 31, while the cash-in-bank account in Wakiki’s books has a balance of $7,375 on this date, after all cash activity for the month had been posted.
Prepare a bank reconciliation based on the starting balances above, and the following additions and deductions:
(a) Checks outstanding, $2,402.
(b) Deposits still in transit, $1,442.
(c) Checking account service charges, $57.
(d) A note receivable was collected by the bank, $1,750 (this amount includes interest revenue of $50).
(e) A check marked ‘NSF’ for $825 was returned; the customer was supposedly paying Wakiki on account.
(f) A check for $81 paid on account by Wakiki, on July 15th had been incorrectly recorded in Wakiki's general journal as $18
(Hint: The bank does not make an error in this problem.)
2) Prepare the two journal entries that are required by the just completed reconciliation from Problem 1, above, for July 31.