Question

uly bank statement sent by the bank to ABC company shows a balance of cash on deposit at July 31 of Br.4,964.47 Assume that on July 31, assume the on July 31, ABCs ledger shows a bank balance of Br. 4 173. 83. 1. A deposit of Br 410. 90 made after banking hours and doesnt appear in the bank statement2. A check drawn for Br. 79 had been erroneously charged by the bank Br.973. For checks issued in July have not yet been paid by the bank (outstanding checks). : Theses checks are;- Check No date amount 801 June 15 ---Br.100,00 888 July 24 ----Br. 10.25 890 July 27--- Br. 294.50 891 July 30 ---Br. 205.004. A check written for birr 210 had been incorrectly charged by the bank as birr 120 5. Proceeds from collection of a interest bearing note receivable from David. ABC Company had left this note with the banks collection department. The face amount of the note was birr 500 6. Br. 24.75 interest earned on average account balance during July7. A check for Br. 10 returned with the statement had been recorded in the check register as Br. 100. The check was for the payment of an obligation to Davis Equipment Company for the purchase of office supplies on account 8. Br. 5,00 fee charged by bank for handling collection of note receivable 9. Br. 50.25 check from customer John deposited by ABC company charged bank as Non sufficient fund (NSF) 10. Br. 12.70 service charged by bank for the month of July. 11. Check number 875 was issued July 20 in the amount of Br 85 but was erroneously recorded in the cash payment Journal as Br 58 for payment of telephone expense

Answer 1

To reconcile the bank statement balance with the ledger balance, we need to account for the various transactions and adjustments. Let's go through each item step by step:

Starting with the ledger balance:

ABC's ledger balance on July 31: Br. 4,173.83

Deposit made after banking hours:

Deposit: Br. 410.90

Adjust the ledger balance:

Ledger balance: Br. 4,173.83 + Br. 410.90 = Br. 4,584.73

Erroneously charged check:

Erroneous charge by the bank: Br. 973.00

Adjust the ledger balance:

Ledger balance: Br. 4,584.73 - Br. 973.00 = Br. 3,611.73

Outstanding checks:

Check No. 801: Br. 100.00

Check No. 888: Br. 10.25

Check No. 890: Br. 294.50

Check No. 891: Br. 205.00

Adjust the ledger balance:

Ledger balance: Br. 3,611.73 - (Br. 100.00 + Br. 10.25 + Br. 294.50 + Br. 205.00) = Br. 3,002.98

Incorrectly charged check:

Incorrect charge by the bank: Br. 120.00 instead of Br. 210.00

Adjust the ledger balance:

Ledger balance: Br. 3,002.98 + (Br. 210.00 - Br. 120.00) = Br. 3,092.98

Proceeds from collection of the interest-bearing note receivable:

Proceeds: Br. 500.00

Adjust the ledger balance:

Ledger balance: Br. 3,092.98 + Br. 500.00 = Br. 3,592.98

Interest earned on average account balance:

Interest earned: Br. 24.75

Adjust the ledger balance:

Ledger balance: Br. 3,592.98 + Br. 24.75 = Br. 3,617.73

Check returned for incorrect amount:

Returned check: Br. 100.00 instead of Br. 10.00

Adjust the ledger balance:

Ledger balance: Br. 3,617.73 - (Br. 100.00 - Br. 10.00) = Br. 3,527.73

Bank fee for handling note collection:

Bank fee: Br. 5.00

Adjust the ledger balance:

Ledger balance: Br. 3,527.73 - Br. 5.00 = Br. 3,522.73

Check from customer charged as NSF:

Check from John: Br. 50.25

Adjust the ledger balance:

Ledger balance: Br. 3,522.73 - Br. 50.25 = Br. 3,472.48

Bank service charge:

Service charge: Br. 12.70

Adjust the ledger balance:

Ledger balance: Br. 3,472.48 - Br. 12.70 = Br. 3,459.78

Erroneously recorded check:

Check No. 875: Br. 58.00 instead of Br. 85.00

Adjust the ledger balance:

Ledger balance: Br. 3,459.78 + (Br. 85.00 - Br. 58.00) = Br. 3,486.78

After considering all the adjustments and transactions, the reconciled ledger balance is Br. 3,486.78.

Therefore, the reconciled ledger balance on July 31 is Br. 3,486.78.

Explanation: