Question

The bank statement for Allen Co. indicates a balance of $8,000.00 on June 30. After the journals for June had been posted, the cash account had a balance of $3,675.00. Prepare a bank reconciliation on the basis of the following reconciling items: (a) Cash sales of $342 had been erroneously recorded in the cash receipts journal as $324. (b) Deposits in transit not recorded by bank, $500. (c) Bank debit memorandum for service charges, $25. (d) Bank credit memorandum for note collected by bank, $2,850, including $50 interest. (e) Bank debit memorandum for $218 NSF (not sufficient funds) check from Alice Bell, a customer. (f) Checks outstanding, $2,200.

Answer 1

Answer and Explanation:

The preparation of bank reconciliation is shown below:-

Cash balance according to bank statement $8,000

Add deposits in transit not recorded by bank $500

Total $8,500

Less: outstanding checks $2,200

Adjusted balance $6,300

Cash balance according to depositor's records $3,675

Add: Note collected by bank, including $50 interest $2,850

Error in recording cash sales of $342 as $324 $18

Total $6,543

Less: NSF check from Alice Bell $218

Bank service charges $25

Adjusted balance $6,300