Preparing a bank reconciliation and journal entries

The December cash records of Davidson Insurance follow:

Davidson’s Cash account shows a balance of \(17,450 at December 31. On December

31, Davidson Insurance received the following bank statement:

Additional data for the bank reconciliation follow:

a. The EFT credit was a receipt of rent. The EFT debit was an insurance payment.

b. The NSF check was received from a customer.

c. The \)1,400 bank collection was for a note receivable.

d. The correct amount of check no. 1419, for rent expense, is \(1,930. Davidson’s

controller mistakenly recorded the check for \)1,390.

Requirements

1. Prepare the bank reconciliation of Davidson Insurance at December 31, 2018.

2. Journalize any required entries from the bank reconciliation.

Particulars

Amount

Particulars

Amount

Balance as per bank

$18,955

Balance as per cash book

$17,450

Add:

Add:

Outstanding Deposits

$1,860

Rent Receipts

$350

Note Collection

$1,400

Deductions:

Deductions:

Outstanding Checks

$2,790

NSF Cheque

$400

Incorrect recording of check

$540

EFT Payment

$225

Service Charge

$10

Adjusted Balance on December 31

$18,025

Adjusted Balance on December 31

$18,025

Date

Particulars

Debit

Credit

December 31

Cash

$350

Rent Revenue

$350

(To record the rent revenue)

December 31

Cash

$1,400

Notes Receivable

$1,400

(To record the receipt on notes receivable)

December 31

Accounts Receivable

$400

Cash

$400

(To record NSF Check)

December 31

Rent Expense

$540

Cash

$540

(To record the payment of the rent)

December 31

Accounts Payable

$225

Cash

$225

(To record the payment of accounts payable)

December 31

Misc. Expense

$25

Cash

$25

(To record the payment of misc. expense)