Question

The Cash account of Queen City Security Systems reported a balance of $2,500 at December 31,2024, There were outstanding checks totaling $1,200 and a December 31 deposit in transit of $400. The bank statement, which came from Park Cities Bank, listed the December 31 balance of $3,870. Included in the bank. balance was a collection of $580 on account from Kelly Brooks, a Queen. City customer who pays the bank directly. The bank statement also shows a $20 service charge and $10 of interest revenue that Queen City earned on its bank balance. Prepare Queen City's bank reconciliation at December 31

Answer 1

To prepare Queen City's bank reconciliation, deduct outstanding checks and add deposit in transit to the company's balance. Deduct collection paid directly to the bank and add any service charges or interest revenue. Compare adjusted balance with the bank balance to reconcile any differences.

Step-by-step explanation:

To prepare Queen City's bank reconciliation at December 31, we need to adjust the Cash account balance reported by the company to match the balance reported by the bank. First, we deduct the outstanding checks totaling $1,200 from the company's balance. Next, we add the deposit in transit of $400 to the company's balance. Now, let's consider the bank statement. We deduct the collection of $580 from Kelly Brooks, as this was paid directly to the bank. We also deduct the $20 service charge and add the $10 interest revenue earned by Queen City. Finally, we compare the adjusted company's balance with the bank balance to reconcile any differences.