Ex. 198(Cont.)

Check No. 18 was correctly written for $708.62 for a payment on account. The NSF check was from S. Long, a customer, in settlement of an accounts receivable. An entry had not been made for the NSF check. The credit memo is for the collection of a note receivable including interest of $60 which has not been accrued. The bank service charge is $25.00.

Instructions

(a)Prepare a bank reconciliation at October 31.

(b)Prepare the adjusting journal entries required by the bank reconciliation.

Ex. 199

Riley Company received a notice with its bank statement that the bank had collected a note receivable for $5,000 plus $150 of interest. The bank had credited these amounts to Riley 's account less a collection fee of $10. Riley Company had already accrued the interest for this note on its books.

(a)How will these items affect Riley Company's bank reconciliation?

(b)Prepare the journal entry that Riley Company will make to record this information on its books.