The following data were accumulated for use in reconciling the bank account of Creative Design Co. for August 20Y6: a. Cash balance according to the company's records at August 31, $19,140.
b. Cash balance according to the bank statement at August 31, $19,950.
c. Checks outstanding, $3,890. Deposit in transit not recorded by bank, $3,120.
d. A check for $340 in payment of an account was erroneously recorded in the check register as $430.
e. Bank debit memo for service charges, $50.

Required:
Journalize the entries that should be made by the company that (a) increase cash and (b) decrease cash.

Looking at the data, there are only a few entries that increase and decrease cash.

The entry that increases cash is:

This increases cash because the payment was higher than it should be so when we adjust it, the cash will increase to reflect that more of it was spent than it should have been.

The increase is:

= 430 - 340

= $90

Date                 Account Title                                          Debit               Credit

August 20Y6   Cash                                                         $90

                         Accounts Payable                                                            $90

The entry that decreases cash is:

Bank is charging us for its services. This is an expense that reduces the cash balance.

Date                 Account Title                                          Debit               Credit

August 20Y6   Bank charges                                           $50

                         Cash                                                                                  $50

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