The cash receipts and the cash payments of River Estates Development for November 2014 are as follows:

The Cash account of River Estates shows a balance of $16,983 on November 30, 2014. Outstanding amounts from the previous month's bank reconciliation were cheque #1219 for $500, cheque #1218 in the amount of $400, and an October 31 deposit in the amount of $2,000. On December 3, 2014, River Estates received this bank statement:

Explanations: EFT-electronic funds transfer, NSF-nonsufficient funds
Additional data for the bank reconciliation:
a. The EFT deposit was a receipt of monthly rent. The EFT debit was payment of monthly insurance.
b. The NSF cheque was received late in October from a customer.
c. The $1,430 bank collection of a note receivable on November 30 included $100 interest revenue.
d. The correct amount of cheque number 1227, a payment on account, is $4,968. (The River Estates Development accountant mistakenly recorded the cheque for $4,468.)
Required
1. Prepare the bank reconciliation of River Estates Development at November 30, 2014.
2. Describe how a bank account and the bank reconciliation help River Estates managers control the business's cash.
3. How are outstanding items from the previous month's bank reconciliation that clear on the November bank statement dealt with?

Transcribed Image Text:

Cash Receipts (Posting reference is CR) Cash Payments (Posting reference is CP) Cheque No. Date Cash Debit Cash Credit $ 3436 $ 1,819 Nov. 5 1221 470 1222 1,144 13 1,723 1,065 1223 429 15 1224 111 1225 19 441 816 24 875 1226 109 2,598 s10,608 30 1227 4,468 Total 1228 998 1229 330 2,724 1230 Total $12,948 Bank Statement for November 2014 Description Withdrawals Deposits Date Balance Balance Forward Nov01 18,223 Deposit 2,000 Nov01 20,223 EFT Rent Collection 880 Nov01 21,103 Deposit NSF Cheque Chq#001221 Deposit Chq#001222 Chq#001223 Deposit Chq#001224 Deposit 3,436 Nov06 24,539 433 Nov08 24,106 1,819 Nov09 22,287 470 Nov10 22,757 1,144 Nov13 21,613 429 Nov14 21,184 1,723 Nov14 22,907 111 Nov15 22,796 1,065 Nov15 23,861 23,586 EFT Insurance 275 Nov19 Nov20 Deposit Chq#001225 Deposit Chq#001226 Chq#001227 441 24,027 816 Nov22 23,211 875 Nov25 24,086 109 Nov29 23,977 4,968 Nov30 19,009 Bank Collection 1,430 Nov30 20,439 Chq#001219 Service Charge 500 Nov30 19,939 25 Nov30 19,914 10,629 12,320