Bank Reconciliation

H 101 Bank Reconciliation 1. Lisa Beja is unable to reconcile the bank balance at January 31. Lisa’s reconciliation is as follows: Cash balance per bank Add: NSF check Less: Bank service charge Adjusted balance per bank $3,660.20 590.00 25.00 $4225.20 Cash balance per books Less: Deposits in transit Add: Outstanding Checks Adjusted balance per books $3,875.20 530.00 930.00 $4,275.20 A) Prepare a correct bank reconciliation. B) Journalize the entries required by the reconciliation. 2. At July 31, Chevron Company has the following bank information: cash balance per bank $7,420.00, outstanding checks $762.00, deposits in transit $1,620.00 and a bank service charge $20.00. Determine the adjusted cash balance per bank at July 31. 3. At May 31, Delta Company has a cash balance per books of $8,900 and the following additional data from the bank statement: charge for printing Delta Company checks $35.00, interest earned on checking account balance $40.00, and outstanding checks $800.00. Determine the adjusted cash balance per books at May 31. 4. The bank statement of Little’s Floral shows a final balance of $8,966 as of October 31. The present balance of the cash account in the ledger, after Little’s accountant has posted from the journal, is $8,030.50. The accountant took the following steps: 1) Verified that canceled checks were recorded correctly on the bank statement. 2) Discovered that a deposit of $1,003 made on Oct 31 was not recorded on the bank statement. 3) Noted outstanding checks: no. 1916, $461; no. 2022, $119; no. 2023, $827; no. 2024, $67. 4) Noted that a credit memo for a note collected by the bank from Lee and Brock, $600 principle plus $6 interest, was not recorded in the journal. 5) Found that check no. 2001 for $523 payable to Davis, Inc., on account, was recorded in the journal as $532. (The correct amount is $523.) 6) Noted that a debit memo for a collection charge and service charge of $5.50 was not recorded in the journal. 7) Noted that a debit memo for an NSF check for $125 from M.D. Scott was not recorded. 8) Noted that a $20 personal withdrawal by Roberta Little, the owner, using an ATM, was not recorded. Prepare a correct bank reconciliation. Journalize the entries required by the reconciliation. 1 H 101 ANSWERS: 1. (a) Cash balance per bank statement............................................... Add: Deposits in transit............................................................. $3,660.20 530.00 4,190.20 930.00 $3,260.20 Less: Outstanding checks............................................................ Adjusted cash balance per bank ................................................. $3,875.20 Cash balance per books ................................................................. Less: NSF check ............................................................................ Bank service charge....................................................... Adjusted cash balance per books ............................................... (b) $590.00 25.00 Accounts Receivable ................................................................................... Cash ..................................................................................................... Miscellaneous Expense ............................................................................... Cash ………………………………………………………………………………………. 590.00 590.00 25.00 25.00 2. Cash balance per bank ................................................................................................................... Add: Deposits in transit............................................................................................................. Less: Outstanding checks ........................................................................................................... Adjusted cash balance per bank................................................................................................. 3. Cash balance per books ................................................................................................................. Add: Interest earned ................................................................................................................. Less: Charge for printing company checks.............................................................................. Adjusted cash balance per books............................................................................................... 4. Adjusted bank statement and ledger balance: $8,495.00 606 cash journalize: cash N/R 600 A/P Interest 6 error #2001 Misc exp Cash A/R 5.50 125 5.50 R.L. Drawing cash 615.00 $3,260.20 9 $7,420 1,620 9,040 762 $8,278 $8,900 40 8,940 35 $8,905 9 20 5.50 2 H 101 Cash NSF check 125 3