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Sage Hill Inc.’s bank statement from Main Street Bank at August 31, 2022, gives the following information.


Balance, August 1 $18,635 Bank debit memorandum:
August deposits 71,235 Safety deposit box fee $40
Checks cleared in August 68,663 Service charge 65
Bank credit memorandum: Balance, August 31 21,162
Interest earned 60

A summary of the Cash account in the ledger for August shows the following: balance, August 1, $18,935; receipts $74,235; disbursements $73,555; and balance, August 31, $19,615. Analysis reveals that the only reconciling items on the July 31 bank reconciliation were a deposit in transit for $4,815 and outstanding checks of $4,515. In addition, you determine that there was an error involving a company check drawn in August: A check for $400 to a creditor on account that cleared the bank in August was journalized and posted for $40.

Required:
Journalize the adjusting entries to be made by Sage Hill Inc. at August 31.

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Answer:

31-Aug-22

Dr Bank Account 60

Cr Interest Received for the month of Aug22 60

31-Aug-22

Dr Sundry Creditors 360

Cr Bank Account 360

31-Aug-22

Dr Bank Charges Dr 105

Cr Bank Account Cr 105

Explanation:

Preparation of the adjusting entries to be made by Sage Hill Inc. at August 31

31-Aug-22

Dr Bank Account 60

Cr Interest Received for the month of Aug22 60

(To record Interest earned)

31-Aug-22

Dr Sundry Creditors 360

Cr Bank Account 360

($400-40)

(To correct error in recording check)

31-Aug-22

Dr Bank Charges Dr 105

Cr Bank Account Cr 105

($65+40)

(To record service charge and safety deposit box fee)

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