Question

Nolan Company's cash account shows a $21,268 debit balance and its bank statement shows $19,711 on deposit at the close of business on June 30. Outstanding checks as of June 30 total $2,231. The June 30 bank statement lists $27 in bank service charges; the company has not yet recorded the cost of these services. In reviewing the bank statement, a $50 check written by the company was mistakenly recorded in the company’s books as $59. June 30 cash receipts of $3,801 were placed in the bank’s night depository after banking hours and were not recorded on the June 30 bank statement. The bank statement included a $31 credit for interest earned on the company’s cash in the bank. The company has not yet recorded interest earned. Prepare a bank reconciliation using the above information.

Answer 1

To reconcile, add deposits in transit and interest earned to the respective balances, and subtract outstanding checks, bank service charges, and a check recording error. The adjusted bank and book balances should match, but in this case, a discrepancy of $18 requires investigation.

Step-by-step explanation:

Bank Reconciliation for Nolan Company

To reconcile Nolan Company's cash account with the bank statement, we need to adjust the balance per books and the balance per bank to reflect all relevant transactions. Here is the step-by-step reconciliation:

Balance per bank statement: $19,711

• Add: Deposits in transit $3,801
• Less: Outstanding checks $2,231

Adjusted bank balance: $21,281

Balance per company's books: $21,268

• Add: Interest earned $31
• Less: Bank service charges $27
• Less: Check recording error $9 ($50 recorded as $59)

Adjusted book balance: $21,263

The adjusted bank balance and adjusted book balance should agree after making these adjustments. In this scenario, there is a discrepancy of $18, which needs further investigation to resolve.

Note: The bank reconciliation does not include information from the T-account balance sheet preparations or the illustration of a loan process by Singleton Bank, as they are not relevant to Nolan Company's situation.

Answer 2

Balance at Bank as per the Cash Book $21,250

Add Unpresented Checks :

Outstanding checks $2,231

Less Lodgements not yet credited :

Cash Receipts - Night Depository ($3,801)

Balance as per Bank Satement $20,400

Step-by-step explanation:

First bring the Cash book up to date :

Cash Book Bank Balanace

Debits :

Bank Balance as of June 30 $21,268

Error - Overstated Check $9

Totals 21,277

Interest earned $31

Credits :

Bank service charges $27

Balance (Up to Date) $21,250

Totals $21,277

Then, Prepare the Bank Reconciliation Statement :

Balance at Bank as per the Cash Book $21,250

Add Unpresented Checks :

Outstanding checks $2,231

Less Lodgements not yet credited :

Cash Receipts - Night Depository ($3,801)

Balance as per Bank Satement $20,400