Question

the cash account of reese corporation had a balance of $3,540 at october 31, 2024. included were outstanding checks totaling $1,800 and an october 31 deposit of $300 that did not appear on the bank statement. the bank statement, which came from turnstone state bank, listed an october 31 balance of $5,570. included in the bank balance was an october 30 collection of $600 on account from a customer who pays the bank directly. the bank statement also showed a $30 service charge, $10 of interest revenue that reese earned on its bank balance, and a non sufficient funds (nsf) check for $50. reese corporations bank reconciliation follows. make the companys journal entries for transactions that arise from the bank reconciliation. date each transaction october 31, 2024, and include an explanation with each entry. (record debits first, then credits. select the explanation on the last line of the journal entry table.) record the bank collection. bank reconciliation reese corp. bank reconciliation october 31, 2024

Explanation:

Step1: Record the bank collection

When the bank collects an amount on behalf of the company, the company's cash (an asset) increases and the accounts receivable (since the customer was paying on account) decreases.

Date	Accounts and Explanations	Debit	Credit
	Accounts Receivable		$600
	(To record bank collection of customer account)

Step2: Record the interest revenue

The interest revenue earned by the company increases the cash (asset) and is recognized as revenue (which increases equity).

Date	Accounts and Explanations	Debit	Credit
	Interest Revenue		$10
	(To record interest revenue earned on bank balance)

Step3: Record the service charge

The service charge is an expense for the company, which decreases the cash (asset) and is recognized as an expense (which decreases equity).

Date	Accounts and Explanations	Debit	Credit
	Cash		$30
	(To record bank service charge)

Step4: Record the NSF check

The NSF check means the company's cash (asset) that was previously recorded (when the check was received) is reversed. Since the customer's account is now uncollectible (as the check bounced), accounts receivable (asset) is increased (as the customer still owes the company).

Date	Accounts and Explanations	Debit	Credit
	Cash		$50
	(To record NSF check from customer)

Answer:

For the bank collection:

Date	Accounts and Explanations	Debit	Credit
	Accounts Receivable		$600
	(To record bank collection of customer account)

For the interest revenue:

Date	Accounts and Explanations	Debit	Credit
	Interest Revenue		$10
	(To record interest revenue earned on bank balance)

For the service charge:

Date	Accounts and Explanations	Debit	Credit
	Cash		$30
	(To record bank service charge)

For the NSF check:

Date	Accounts and Explanations	Debit	Credit
	Cash		$50
	(To record NSF check from customer)