Question

The bank statement for the month of May for the Hawthorne Manufacturing Company is as follows:

Balance May 1: 32,120
Deposits: 82,140
Checks processed: (78,433)
Service Charges: (80)
NSF Checks (2,187)
Note payment collected by bank (includes 120 interest): 1,120
Balance May 31: 34,680
The company's general ledger account has a balance of $35,276 at the end of May. A review of the company records reveals the following:
- cash receipts not yet deposited: 2,965
- a deposit of 1,020 was made on May 31 but not yet credited to account
- checks written in May that has not been processed by the bank total 5,536
- a check written for 1,790 was incorrectly recorded by the company as a 790 disbursement
What is the process to adjust the bank balance to the corrected balance?

Answer 1

To adjust the bank balance to match the company's ledger, add unrecorded deposits, subtract outstanding checks, and correct any discrepancies in recorded transactions.

Step-by-step explanation:

To reconcile the bank statement with the company's general ledger account for Hawthorne Manufacturing Company, you would need to make several adjustments to the bank's ending balance of $34,680.

• Add the cash receipts not yet deposited ($2,965).
• Add the deposit made on May 31 that was not yet credited ($1,020).
• Subtract the total checks written that have not yet been processed by the bank ($5,536).
• Correct the discrepancy from the incorrectly recorded disbursement with the actual amount of the check ($1,790) versus the recorded amount ($790), which results in adding the difference ($1,000) back to the balance.

After making these adjustments, the corrected balance would match the company's ledger balance of $35,276.