Els Company most recently reconciled its bank statement and book balances of cash on August 31 and it reported two checks outstanding, No. 5888 for $1,038.05 and No. 5893 for $484.25. The following information is available for its September 30, 2005, reconciliation:
ELS COMPANY
August 31 bank reconciliation:
Outstanding checks:
No. 5888 1,038.05
No. 5893 495.95
From the September 30 bank statement:
September 30 Bank Statement:
Previous balance 16,800.45
Total Checks and Debits 9,620.05
Total Deposits and Credits 11,182.85
Current Balance 18,363.25
Checks and Debits Daily Balance
Date Check Amount Date Amount
09/03 5888 1,038.05 8/31 16,800.45
09/04 5902 731.90 9/3 15,762.40
09/07 5901 1,824.25 9/4 15,030.50
09/17 NSF 588.25 9/5 16,134.25
09/20 5905 937.00 9/7 14,310.00
09/22 5903 399.10 9/12 16,536.90
09/22 5904 2,080.00 9/17 16,948.65
09/28 5907 213.85 9/20 15,011.65
09/29 5909 1,807.65 9/21 19,104.65
9/22 1,625.55
9/25 18,977.25
Deposits and Credits 9/28 18,763.40
Date Description Amount 9/29 16,955.75
09/05 Deposit 1,103.75 9/30 18,363.25
09/12 Deposit 2,226.90
09/21 Deposit 4,093.00
09/25 Deposit 2,351.70
09/30 Interest 2,250.00
09/30 Credit memo 1,385.00
From Els Company's Accounting Records:
Cash Receipts Deposited: Cash Disbursements:
Date Cash Debit Check No. Cash Credit
Sept. 5 1,103.75 5901 1,824.25
12 2,226.90 5902 731.90
21 4,093.00 5903 399.10
25 2,351.70 5904 2,050.00
30 1,582.75 5905 937.00
11,358.10 5906 859.30
5907 213.85
5908 276.00
5909 1,807.65
9,099.05
Cash Acct. No. 101
Date Explanation PR Debit Credit Balance
Aug. 31 Balance 15,278.15
Sept. 30 Total receipts 11,358.10 26,636.25
30 Total disbursements 9,099.05 17,537.20
Check No. 5904 for computer equipment:
Entered in accounting records 2,050.00
Correct amount of check 2,080.00
Collection of Note:
Credit memorandum from bank 1,400.00
Bank collection fee 15.00
Check figures:
(1) Reconciled balance $18,326
(2) Credit Note Receivable 1,400
Check No. 5904 is correctly drawn for $2,080 to pay for computer equipment; however, the recordkeeper misread the amount and entered it in the accounting records with a debit to Computer Equipment and a credit to Cash of $2,050. The NSF check shown in the statement was originally received from a customer, S. Nilson, in payment of her account. Its return has not yet been recorded by the company. The credit memorandum is from the collection of a $1,400 note for Els Company by the bank. The bank deducted a $15 collection fee. The collection and fee are not yet recorded.
Required
1. Prepare the September 30, 2005, bank reconciliation for this company.
2. Prepare the journal entries to adjust the book balance of cash to the reconciled balance.
Analysis Component
3. The bank statement reveals that some of the prenumbered checks in the sequence are missing.
Describe three situations that could explain this.