Question

A student's bank statement reflects $1,600 at month end. The student's checkbook, before reconciling, reflects $1,500. The student has $5 of interest on the bank statement which has not been posted to his/her checkbook, deposits in transit of $100, and outstanding checks of $195. What is the reconciled bank balance?

a. $1,400
b. $1,520
c. $1,510
d. $1,505

Answer 1

1600

Step-by-step explanation:

Balance As per Checkbook = 1500

Add: checks issued but not presented in bank = 195

Add: Interest Income not recorded in books = 5

Less: Depsits recorded in books but not presented in books = (100)

Balance As per bank statement = 1600

Answer 2

$1505

Step-by-step explanation:

Bank reconciliation is done to agree cash balance in the book with balance in the bank statement.

In reconciling these amounts, some items are added and some subtracted.

In this case, three items are needed to be reconciled: interest of $5, deposit in transit of $100 and outstanding check of $195.

Starting with the bank statement balance, only items that have not been registered in the account will be considered. Hence, $5 interest will not be considered because it has been included in the unadjusted bank balance already.

For the other two items, the treatment is as follows: deposit in transit is added to bank balance and uncleared check subtracted.

$

Bank Balance 1600

Add: Deposit in transit 100

Subtract Outstanding check (195)

Balance per adjusted bank balance 1505