Pelzer Company reconciled its bank and book statement balances of Cash on August 31 and showed two

Question:

Pelzer Company reconciled its bank and book statement balances of Cash on August 31 and showed two cheques outstanding at that time, #5888 for $6,220.00 and #5893 for $1,485.65. The following information was available for the September 30, 2020, reconciliation:

From the September 30, 2020, bank statement:

From Pelzer Company?s accounting records:

? Cheque #5904 was correctly written for $9,340.55 to pay for computer equipment; however, the bookkeeper misread the amount and entered it in the accounting records with a debit to Computer Equipment and a credit to Cash as though it were for $3,940.55. The NSF cheque was originally received from a customer, Lisa Willis, in payment of her account. Its return was not recorded when the bank first notified the company.

? The credit memo resulted from an electronic fund transfer of $3,550 for a customer payment. The bank had deducted a $50 bank service charge. The collection has not been recorded.

Required

1. Prepare a September 30 bank reconciliation for the company.

2. Prepare the general journal entries needed to adjust the book balance of cash to the reconciled balance.

Analysis Component: The preceding bank statement discloses three places where the cancelled cheques returned with the bank statement are not numbered sequentially. In other words, some of the prenumbered cheques in the sequence are missing. Several possible situations would explain why the cancelled cheques returned with a bank statement might not be numbered sequentially. Describe three possible explanations.

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