Question

Bank Reconciliation

The bank reconciliation made by Thurman, Inc., on August 31 showed:

Deposit in transit of $1,170
Outstanding checks no.597 $650
no.603 $710
The reconciled cash balance on August 31 was $14,110

The following bank statement is available for September:

Bank Statement
TO Thurman, Inc. September 30
St. Louis, MO STATE BANK
Date Deposits No. Date Charges Date Balance
Aug. 31 $14,300
Sept. 1 $1,170 597 Sept. 1 $650 Sept. 1 14,820
2 1,120 607 5 1,850 2 15,940
5 850 608 5 1,100 5 13,840
9 744 609 8 640 8 13,200
15 585 610 9 552 9 13,392
17 1,540 611 15 817 15 13,160
25 1,028 612 17 488 17 14,212
30 680 614 25 920 25 14,320
NSF 29 991 29 13,329
SC 30 36 30 13,973
, ,
Item codes EC: Error Correction DM: Debit Memo CM: Credit Memo
SC: Service Charge OD: Overdraft RT: Returned Item
IN: Interest Earned NSF: Non-sufficient Funds

A list of deposits made and checks written during September is shown below:

Deposits Made Checks Written
Sept. 1 $1,120 No. 607 $1,850
4 850 608 1,100
8 744 609 640
12 585 610 552
16 1,540 611 871
24 1,028 612 488
29 680 613 310
30 1,266 614 920
$7,813 615 386
616 420
$7,537

The Cash in Bank account balance on September 30 was $14,386. In reviewing checks returned by the bank, the accountant discovered that check No. 611 written for $817 for advertising expense, was recorded in the cash disbursements journal as $871. The NSF check written for $991, which Thurman deposited on September 24, was a payment on account from customer D. Walker.

Required
a. Prepare a bank reconciliation for Thurman, Inc., at September 30.
This is what I have so far

Answer 1

Reconciled cash balance is $14,857 after adjusting for deposits in transit, outstanding checks, and incorrect check recording.

Your bank reconciliation is correct.

Here is a breakdown of the reconciliation:

```

Bank statement balance on September 30: $13,973

Add:

Deposits in transit: $1,170

Check No. 611 recorded incorrectly: $871 - $817 = $54

Less:

Outstanding checks: $650 + $710 = $1,360

NSF check from D. Walker: $991

Reconciled cash balance: $14,857

```

The journal entries to record the necessary adjustments are as follows:

```

Journal Entry 1

Account | Debit | Credit

------- | -------- | --------

Advertising Expense | $817 |

Cash in Bank | $54

Journal Entry 2

Account | Debit | Credit

------- | -------- | --------

Accounts Receivable | $991 |

Cash in Bank | $991

```

After these two journal entries are posted, the Cash in Bank account balance will match the reconciled cash balance of $14,857.