Given:
Bayne Bank indicating a balance of $7,980.
Lee's checkbook showed a balance of $6,800.
checks outstanding were $1,330.
NSF check for $120 and a service charge of $30.
Bank balance: 7,980
less: outstanding checks (1,330)
Bank balance, end 6,650
Jim's checkbook balance: 6,800
less: NSF check 120
service charge 30 (150)
Jim's balance, end 6,650
The reconciled balance is: $6,650.
In reconciling the bank balance, we need to add the deposits in transit and deduct the outstanding checks. This are all transactions reflected in the book but not yet reflected in the bank account.
In reconciling the book balance, we need to add the credits made in the bank account and deduct the debits like service charges.