The August 31 bank statement of Security System Company has just arrived from United Bank. To prepare the Security System bank reconciliation, you gather the following data:

a. Security System's Cash account shows a balance of \(\$ 6,866.14\) on August 31 .

b. The bank statement includes two charges for returned checks from customers. One is a \(\$ 395.00\) check received from Shoreline Express and deposited on August 20, returned by Shoreline's bank with the imprint "Unauthorized Signature." The other is an NSF check in the amount of \(\$ 146.67\) received from Lipsey, Inc. This check had been deposited on August 17.

c. Security System pays rent (\$750) and insurance (\$290) each month by EFT.

d. The following Security System checks are outstanding at August 31:

e. The bank statement includes a deposit of \(\$ 1,191\). 17 , collected by the bank on behalf of Security System. Of the total, \(\$ 1,011.81\) is collection of a note receivable, and the remainder is interest revenue.

f. The bank statement shows that Security System earned \(\$ 38.19\) of interest on its bank balance during August. This amount was added to Security System's account by the bank.
g. The bank statement lists a \(\$ 10.50\) subtraction for the bank service charge.
h. On August 31 the Security System treasurer deposited \(\$ 316.15\), but this deposit does not appear on the bank statement.
i. The bank statement includes a \(\$ 300.00\) deposit that Security System did not make. The bank had erroneously credited the Security System account for another bank customer's deposit.
j. The August 31 bank balance is \(\$ 7,984.22\).
\section*{Required}
1. Prepare the bank reconciliation for Security System Company at August 31.
2. Record in general journal form the entries necessary to bring the book balance of Cash into agreement with the adjusted book balance on the reconciliation. Include an explanation for each entry.
3. How will what you learned in this problem help you manage a business?

Transcribed Image Text:

Check No. Amount 237 $ 46.10 288 141.00 291 578.05 293 11.87 294 609.51 295 8.88 296 101.63