Question

Joe Donney operates a roller skating center. He has just received the monthly bank statement at August 31 from Citizens National Bank, and the statement shows an ending balance of $638. Listed on the statement are an EFT rent collection of $375, a service charge of $9, two NSF checks totaling $137, and a $20 charge for printed checks. In reviewing his cash records, Donney identifies outstanding checks totaling $756 and an August 31 deposit in transit of $1,695. During August, he recorded a $280 check for the salary of a part-time employee as $28. Donney’s Cash account shows an August 31 cash balance of $1,620. How much cash does Donney actually have at August 31, 2014?

Answer 1

Donney actually have $1,577 at August 31, 2014

Step-by-step explanation:

Prepare a Bank reconciliation to determine the accuracy of the Cash Balance using the following steps

Step 1

Update the Cash Book (Bank Column) Balance

Cash Book (Bank Column)

Debit :

Balance as at August 31 $1,620

Rent collection $375

Total $1,995

Credit :

Service charge $9

Dishonored Checks $137

Printing Charge $20

Error : Understatement $252

Balance as per updated CB $1,577

Total $1,995

Step 2

Prepare a Bank Reconciliation Statement

Bank Reconciliation Statement as at August 31

Balance at Bank as per updated Cash Book $1,577

Add Unpresented Checks $756

Less Lodgements not yet credited ($1,695)

Balance as per Bank Statement $638

Conclusion :

Now that we have reconciled the Updated Cash Balance of $1,577 to the Bank Statement we can safely say Donney actually has $1,577 cash at August 31, 2014.