Answer and Explanation:
1. The preparation of bank reconciliation statement is shown below:-
Home Decorating Pavilion
Bank Reconciliation
Cash balance per bank, March 31 $9,760
Add: Deposit in transit $2,795
Bank Error $605 $3,400
Less: Outstanding checks
358 $445
359 $1,570 $2,015
Reconciled Bank Balance $11,145
Cash balance per books, March 31 $9,832
Add: Collection of Notes Receivable$1,540
($1,400 + $140)
Error in Recording Check No 341 $100 $1,640
($900 - $800)
Less: Bank service charge $17
NSF check $485 $502
Reconciled Cash Balance $10,970
2. The Journal entry is shown below:-
a. Cash Dr, $1,540
($1,400 + $140)
To Notes receivable $1,400
To Interest income $140
(Being cash is recorded)
b. Cash Dr, $100
($900 - $800)
To rent expenses $100
(Being cash is recorded)
c. Accounts receivable Dr, $485
To cash $485
(Being accounts receivable is recorded)
d. Miscellaneous Dr, $17
To cash $17
(Being Miscellaneous is recorded)
