Exercise 7-11

Tamarisk, Inc.s bank statement from Main Street Bank at August 31, 2017, gives the following information.

Balance, August 1		$18,660		Bank debit memorandum:
August deposits		71,260		Safety deposit box fee		$ 40
Checks cleared in August		68,663		Service charge		65
Bank credit memorandum:				Balance, August 31		21,212
Interest earned		60

A summary of the Cash account in the ledger for August shows the following: balance, August 1, $18,960; receipts $74,260; disbursements $73,555; and balance, August 31, $19,665. Analysis reveals that the only reconciling items on the July 31 bank reconciliation were a deposit in transit for $4,815 and outstanding checks of $4,515. In addition, you determine that there was an error involving a company check drawn in August: A check for $400 to a creditor on account that cleared the bank in August was journalized and posted for $40.

Determine deposits in transit.

Deposits in transit

$

SHOW LIST OF ACCOUNTS

Determine outstanding checks. (Hint: You need to correct disbursements for the check error.)

Outstanding checks

$

SHOW LIST OF ACCOUNTS

Prepare a bank reconciliation at August 31. (List items that increase balance as per bank & books first.)

TAMARISK, INC. Bank Reconciliation For the Year Ended August 31, 2017For the Month Ended August 31, 2017August 31, 2017
Adjusted cash balance per bankError in recording checkService chargeSafety deposit box rentDeposits in transitInterest earnedOutstanding checksCash balance per bank statement					$
AddLess :	Safety deposit box rentCash balance per bank statementAdjusted cash balance per bankService chargeDeposits in transitOutstanding checksInterest earnedError in recording check
AddLess :	Outstanding checksService chargeAdjusted cash balance per bankError in recording checkDeposits in transitInterest earnedSafety deposit box rentCash balance per bank statement
Interest earnedDeposits in transitSafety deposit box rentAdjusted cash balance per bankCash balance per bank statementOutstanding checksError in recording checkService charge					$
Cash balance per booksAdjusted cash balance per booksError in recording checkService chargeDeposits in transitOutstanding checksSafety deposit box rentInterest earned					$
AddLess :	Service chargeOutstanding checksSafety deposit box rentCash balance per booksAdjusted cash balance per booksDeposits in transitInterest earnedError in recording check
AddLess :
	Safety deposit box rentService chargeCash balance per booksInterest earnedAdjusted cash balance per booksError in recording checkDeposits in transitOutstanding checks		$
	Outstanding checksCash balance per booksService chargeAdjusted cash balance per booksDeposits in transitInterest earnedError in recording checkSafety deposit box rent
	Interest earnedCash balance per booksService chargeAdjusted cash balance per booksError in recording checkDeposits in transitOutstanding checksSafety deposit box rent
Adjusted cash balance per booksCash balance per booksDeposits in transitInterest earnedOutstanding checksError in recording checkService chargeSafety deposit box rent					$

SHOW LIST OF ACCOUNTS

Journalize the adjusting entries to be made by Tamarisk, Inc. at August 31. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Date	Account Titles and Explanation	Debit	Credit
Aug. 31
	(To record Interest earned)
Aug. 31
	(To correct error in recording check)
Aug. 31
	(To record service charge and safety deposit box fee)

SHOW LIST OF ACCOUNTS