The cash data of Duffy Automotive for May 2018 follow:

Duffy Automotive received the following bank statement on May 31, 2018:

Additional data for the bank reconciliation include the following:

a. The EFT deposit was a receipt of monthly rent. The EFT debit was a monthly insurance payment.

b. The unauthorized signature check was received from a customer and returned by the bank unpaid.
c. The correct amount of check number 3115, a payment on account, is $1,390. (Duffy Automotive’s accountant mistakenly recorded the check as $1,930.)

Requirements

1. Prepare Duffy Automotive’s bank reconciliation at May 31, 2018.

2. Prepare the journal entries required at May 31, 2018.

3. Describe how a bank account and the bank reconciliation help the general manager control Duffy Automotive’s cash.

Transcribed Image Text:

Cash Account No. 101 Debit Credit Balance Date Item Jrnl. Ref. Balance 7,150 16,901 6,593 May 1 9,751 30 CR6 CP11 30 10,308 Cash Receipts (CR) Cash Payments (CP) Cash Debit Check No. Cash Credit Date $ 2,728 $ 1,522 3113 May 2 512 3114 1,759 1,930 63 1,693 832 10 3115 16 3116 427 3117 805 87 29 982 3118 30 2,577 _$9,751 3119 476 Total 3120 1,049 3121 257 3122 2,360 $10,308 Total Bank Statement for May 2018 Beginning balance Deposits and other additions: May 1 4 2$ 7,150 $ 700 EFT 2,728 512 12 17 1,693 832 427 22 23 Checks and other deductions: 1,325 BC 8,217 May 7 13 14 $ 1,522 1,390 492 US 1,759 63 15 18 21 26 30 30 316 EFT 805 87 10 SC (6,444) 8,923 Ending balance Explanation: BC–bank collection of note reccivable from customer, EFT-electronic funds transfer, US-unauthorized signature, SC-service charge