Question

The following information is available for the Savvy Company for the month of June. a. On June 30, after all transactions have been recorded, the balance in the company's Cash account has a balance of $17,202. b. The company's bank statement shows a balance on June 30 of $19,279. c. Outstanding checks at June 30 total $2,984. d. The bank collected $770 on a note receivable that is not yet recorded by Savvy Company. e. A $67 NSF check from a customer, J. Maroon is shown on the bank statement but not yet recorded by the company. f. A deposit placed in the bank's night depository on June 30 totaling $1,675 did not appear on the bank statement. g. Comparing the checks on the bank statement with the entries in the accounting records reveals that check #3445 for the payment of an account payable was correctly written for $2,450, but was recorded in the accounting records as $2,540. h. Included with the bank statement was a bank service charge in the amount of $25. It has not been recorded on the company's books

Answer 1

The reconciled book balance is $16,571, and there is a discrepancy of $2,708 between the adjusted book balance and the bank statement balance that requires further investigation.

To reconcile the bank statement with the company's Cash account, we can use the following steps:

1. **Start with the Book (Company's) Balance:**

- The company's Cash account balance according to its records is $17,202.

2. **Adjust for Outstanding Checks:**

- Deduct outstanding checks from the book balance. Outstanding checks total $2,984.

- Adjusted Book Balance: $17,202 - $2,984 = $14,218.

3. **Adjust for Deposits in Transit:**

- Add any deposits in transit that do not appear on the bank statement. The deposit in transit is $1,675.

- Adjusted Book Balance: $14,218 + $1,675 = $15,893.

4. **Adjust for Bank Collections:**

- Add any bank collections or credits not yet recorded by the company. The bank collected $770 on a note receivable.

- Adjusted Book Balance: $15,893 + $770 = $16,663.

5. **Adjust for Errors and Other Items:**

- Address any errors or discrepancies between the bank statement and the company's records.

- Correct the recording error in check #3445: Deduct $90 ($2,540 - $2,450) from the adjusted book balance.

- Deduct the NSF check from the adjusted book balance: $16,663 - $67 = $16,596.

- Deduct the bank service charge from the adjusted book balance: $16,596 - $25 = $16,571.

6. **Compare to Bank Statement:**

- The bank statement balance is $19,279.

7. **Reconcile:**

- Compare the adjusted book balance with the bank statement balance.

- Adjusted Book Balance: $16,571.

- Bank Statement Balance: $19,279.

- The difference between the two balances needs to be investigated.

In summary, the reconciled book balance is $16,571, and there is a discrepancy of $2,708 between the adjusted book balance and the bank statement balance that requires further investigation.