Question

The Cash account of Safety Security Systems reported a balance of $ 2 comma 450 at December 31​, 2018. There were outstanding checks totaling $ 1 comma 800 and a December 31 deposit in transit of $ 400. The bank​ statement, which came from Park Cities​ Bank, listed the December 31 balance of $ 4 comma 370. Included in the bank balance was a collection of $ 530 on account from Wayne Brown​, a Safety customer who pays the bank directly. The bank statement also shows a $ 30 service charge and $ 20 of interest revenue that Safety earned on its bank balance. Prepare Safety​'s bank reconciliation at December 31.

Answer 1

You can prepare a bank reconciliation by starting with the balance as per the company's books, and undoing all entries that were entered in the books but are not yet reflecting in the bank statement, and then adjusting for all entries that are in the bank statement that were not recorded in the company's books as you would have entered them if given the chance to record them as shown below:

Step-by-step explanation:

Balance as per cash account 2,450

add back outstanding checks 1,800

less deposit in transit (400)

add receipt from Wayne Brown 530

less service charge (30)

Add interest earned 20

Balance as per Bank Statement 4,370