Question

Exercise 7-15

On August 31, 2021, Sheridan Company had a cash balance per its books of $26,660. The bank statement on that date showed a balance of $17,760. A comparison of the bank statement with the Cash account revealed the following.

1.		The August 31 deposit of $17,050 was not included on the August bank statement.
2.		The bank statement shows that Sheridan received EFT deposits from customers on account totalling $2,420 in August. Sheridan has not recorded any of these amounts.
3.		Cheque #673 for $1,320 was outstanding on July 31. It did not clear the bank account in August. All of the cheques written in August have cleared the bank by August 31, except for cheque #710 for $2,600, and #712 for $2,010.
4.		The bank statement showed on August 29 an NSF charge of $139 for a cheque issued by R. Dubai, a customer, in payment of their account. This amount included an $8 service charge by Sheridan’s bank. The company’s policy is to pass on all NSF service charges to the customer.
5.		Bank service charges of $25 were included on the August statement.
6.		The bank recorded cheque #705 for $115 as $151. The cheque had been issued to pay for freight out on a sale. Sheridan had correctly recorded the cheque.

Prepare the necessary adjusting entries on August 31. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Date	Account Titles and Explanation	Debit	Credit
Aug. 31	enter an account title to record electronic receipt from customer on account on August 31     Accounts Payable    Accounts Receivable    Supplies    No Entry    Cash	enter a debit amount	enter a credit amount
	enter an account title to record electronic receipt from customer on account on August 31     Cash    Supplies    No Entry    Accounts Receivable    Accounts Payable	enter a debit amount	enter a credit amount
	(To record electronic receipt from customer on account)
Aug. 31	enter an account title to record NSF cheque and bank service charge expense on August 31     Accounts Payable    Accounts Receivable    Cash    No Entry    Bank Charges Expense	enter a debit amount	enter a credit amount
	enter an account title to record NSF cheque and bank service charge expense on August 31     Bank Charges Expense    Cash    No Entry    Accounts Receivable    Accounts Payable	enter a debit amount	enter a credit amount
	enter an account title to record NSF cheque and bank service charge expense on August 31     Cash    No Entry    Bank Charges Expense    Accounts Receivable    Accounts Payable	enter a debit amount	enter a credit amount
	(To record NSF cheque & bank service charge expense)

Answer 1

Prepare the necessary adjusting entries on August 31. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Date	Account Titles and Explanation	Debit	Credit
Aug. 31	Cash	2420
	Account receivable		2420
	(To record electronic receipt from customer on account)
Aug. 31	Account receivable	139
	Bank Charges (8+25)	33
	Cash		172
	(To record NSF cheque & bank service charge expense)