Exercise 7-14

Metlock, Inc.s bank statement from Main Street Bank at August 31, 2022, gives the following information.

Balance, August 1		$18,740		Bank debit memorandum:
August deposits		71,340		Safety deposit box fee		$ 45
Checks cleared in August		68,658		Service charge		70
Bank credit memorandum:				Balance, August 31		21,372
Interest earned		65

A summary of the Cash account in the ledger for August shows the following: balance, August 1, $19,040; receipts $74,340; disbursements $73,550; and balance, August 31, $19,830. Analysis reveals that the only reconciling items on the July 31 bank reconciliation were a deposit in transit for $4,820 and outstanding checks of $4,520. 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

$enter deposits it transit in dollars

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

Outstanding checks

$enter outstanding checks in dollars

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

Journalize the adjusting entries to be made by Metlock, 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	enter an account title to record interest earned on August 31	enter a debit amount	enter a credit amount
	enter an account title to record interest earned on August 31	enter a debit amount	enter a credit amount
	(To record Interest earned)
Aug. 31	enter an account title for the adjusting entry to correct error in recording check on August 31	enter a debit amount	enter a credit amount
	enter an account title for the adjusting entry to correct error in recording check on august 31	enter a debit amount	enter a credit amount
	(To correct error in recording check)
Aug. 31	enter an account title to record service charge and safety deposit box fee on August 31	enter a debit amount	enter a credit amount
	enter an account title to record service charge and safety deposit box fee on August 31	enter a debit amount	enter a credit amount
	(To record service charge and safety deposit box fee)