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# Bank reconciliations and horizontal models for interest

Prepare a bank reconciliation as of August 31 from the following information:
a. The August 31 balance shown on the bank statement is \$9,810.
b. There is a deposit in transit of \$1,260 at August 31.
c. Outstanding checks at August 31 totaled \$1,890.
d. Interest credited to the account during August but not recorded on the company's books amounted to \$108.
e. A bank charge of \$36 for checks was made to the account during August. Although the company was expecting a charge, its amount was not known until the bank statement arrived.
f. In the process of reviewing the canceled checks, it was determined that a check issued to a supplier in payment of accounts payable of \$631 had been recorded as a disbursement of \$361.
g. The August 31 balance in the general ledger Cash account, before reconciliation, is \$9,378.

E5.9
Agrico, Inc., accepted a 10-month, 13.8% (annual rate), \$4,500 note from one of its customers on June 15; interest is payable with the principle at maturity.

Required:
a. Use the horizontal model or write the entry to record the interest earned by Agrico during it fiscal year ended October 31.
b. Use the horizontal model or write the journal entry to record collection of the note and interest at maturity.

#### Solution Summary

The solution gives detailed steps on prepare a bank reconciliation and using the horizontal model to record the interest.

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