Question

Use the following to answer questions 5-8

Bank Reconciliation: Identify whether the item should be added or subtracted from the bank balance or the company balance. Use the number 1-4) for your response. For instance, if the amount should be added to bank statement balance you would input 1.
1. Added to bank statement balance
2. Subtracted from bank statement balance
3. Added to company cash balance
4. Subtracted from company cash balance
Item
5 Bank deducted too much out of the checking account
6 Bank charge for new checks ordered for the checking account
7 Interest earned on the checking account
8 Checks written but have not cleared the bank yet
Use the following to answer questions 9-11 On February 28th, the general ledger of CAC shows a balance for cash of $220,000 Cash receipts yet to be deposited into the checking account total $126,000, while checks written by CAC but not yet processed by the bank total $147,500. The company's balance of cash does not reflect a NSF check of $119, a service fee of $20 and interest earned of $32 and a customer payments collected by the bank of $6,250; however, these amounts are included in the balance of cash of $247,643 reported by the bank as of the end of February
Answer the following based on the process of doing the bank reconciliation:
9. $________ Determine the total amount that is used to reconcile the Bank balance include if needed):
10. _______Determine the total amount that is used to reconcile the Company cash balance (include "-" if needed)
11. ________What is the balance in the company's cash account after the reconciliation?

Answer 1

Item Identification

5. Bank deducted too much out of Added to bank statement balance

the checking account

6. Bank charges for new checks Subtracted from company cash

ordered for the checking amount

balance

7. Interest earned on the checking Added to company cash balance

account

8. Checks written but have not Subtracted from bank statement

cleared the bank yet balance

9. Total sum of amount used to reconcile the bank balance = Deposit in transit - Outstanding checks = $126,000 - $147,500 = -$21,500

10. Total amount used to reconcile the company cash balance = Interest earned - NSF check - Service fee + Customer payment collected by bank = $32 - $119 - $20 + $6,250 = $6,143

11. Balance in company's cash account after reconciliation = Cash balance on Feb 28 + Total amount used to reconcile the company cash balance = $220,000 + $6,143 = $226,143