Question

You are doing a bank recon for May, 2011. You have a $2,785 unadjusted ledger cash balance and the following data:

- Outstanding checks: #719 $200, #727 $800, #732 $625
- Deposits in transit $1,200
- Check # 742 for repairs written for $505 but incorrectly recorded as $550
- NSF check for a customer $500
- Bank service charge for May $5
- Balance per bank statement $2750

What dollar amount should be deducted from the balance per bank statement?

Answer 1

The total dollar amount to be deducted from the balance per bank statement for the bank reconciliation of May 2011 is $2,175. This includes outstanding checks, adjustment for an incorrectly recorded check, an NSF check, and a bank service charge.

Step-by-step explanation:

To answer the question about the bank reconciliation for May 2011, we need to identify which items should be deducted from the balance per bank statement to reconcile with the company's cash ledger. Here are the details that impact the bank balance:

• Outstanding checks: These are checks that have been written but not yet cleared the bank. We need to deduct the total amount of these checks from the bank statement balance.
• The incorrectly recorded check for repairs: We need to correct the error by deducting the difference between the incorrect amount recorded and the actual amount of the check.
• The NSF (non-sufficient funds) check: Since the customer's check bounced, we must deduct this amount because the bank has deducted it from our account balance.
• Bank service charge: This fee should also be deducted from the bank statement balance.

Thus, the total dollar amount to be deducted from the balance per bank statement is the sum of outstanding checks ($1,625), the error correction ($45), the NSF check ($500), and the bank service charge ($5). This gives us a total deduction of $2,175.