PROBLEM 2

ADJUSTED METHOD
Chivalry Company
Bank Reconciliation
March 31

Balance per book 1,405,000

Add: Note Collection (CM) 2,500,000
Interest on Note (CM) 150,000
Error on check no. 175 45,000 2,695,000
Total 4,100,000
Less: Service charge 5,000
NSF Check 220,000
Preauthorized payment
for light and water 245,000 470,000
Adjusted book balance 3,630,000

Balance per bank 5,630,000

Add: March 31 deposit (DIT) 750,000
Total 6,380,000
Less: Outsanding Checks 1,650,000
Erroneous deposit 1,100,000 2,750,000
Adjusted bank balance 3,630,000