The December cash records of Duffy Insurance follow

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The December cash records of Duffy Insurance follow:

Duffy’s Cash account shows a balance of $17,050 at December 31. On December 31, Duffy Insurance received the following bank statement:

Additional data for the bank reconciliation follow:

a. The EFT credit was a receipt of rent. The EFT debit was an insurance payment.

b. The NSF check was received from a customer.

c. The $1,600 bank collection was for a note receivable.

d. The correct amount of check 1419, for rent expense, is $1,910. Duffys controller mistakenly recorded the check for $1,190.

Requirements

1. Prepare the bank reconciliation of Duffy Insurance at December 31, 2016.

2. Journalize any required entries from the bank reconciliation.

SOLUTION

Requirement 1

BANK  BOOK  
Balance, December 31, 2016 $ 18,480Balance, December 31, 2016 $ 17,050
ADD:  ADD:  
Deposit in transit 1,830EFT collection of rent$ 400 
  20,310Bank collection of note1,6002,000
     19,050
LESS:  LESS:  
Outstanding checks  Correction of book error720 
No. 1420$ 1,470 NSF check600 
No. 14211,200 EFT – insurance payment700 
No. 14226303,300Service charge202,040
Adjusted bank balance, December 31, 2016 $ 17,010Adjusted book balance, December 31, 2016 $ 17,010
      

Requirement 2

DateAccounts and ExplanationDebitCredit
Dec. 31Cash400 
 Rent Revenue 400
 To record EFT rent collection.  
    
31Cash1,600 
 Notes Receivable 1,600
 To record bank collection of notes receivable.  
    
31Rent Expense720 
 Cash 720
 To record error on check 1419.  
    
31Accounts Receivable600 
 Cash 600
 To record NSF check.  
    
31Insurance Expense700 
 Cash 700
 To record EFT insurance payment.  
    
31Bank Expense20 
 Cash 20
 To record bank service charges incurred.  



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ACCOUNTING 416 The December cash records of Duffy Insurance follow.docx