Question

The World Bank forecasts growth of world trade to be 10.20%, up from 18.50% in 2017. This change has caused Galapagos Islands Resort to analyze its current financial situation, beginning with reconciling its accounts. Galapagos Islands Resort received its bank statement showing a balance of $10,419.90. Its checkbook balance is $16,227.00. Deposits in transit are $4,139.00 and $7,320.00. There is a service charge of $30.00 and interest earned of $5.90. Notes collected total $2,216.00. Outstanding checks are No. 1021 for $2,037.00 and No. 1022 for $1,423.00. All numbers are in U.S. dollars. Help Galapagos Island Resort reconcile its balances.

Answer 1

Bank Balance is $25,338.90

Step-by-step explanation:

The Bank Reconciliation Statement is prepared to check the accuracy of the Cash Book Balances through the following steps :

First, Prepare an updated Cash Book

Note : This gives us an adjusted cash book balance

Cash Book (Bank Balances Only)

Debit ;

Balance (unadjusted) $16,227.00

Interest Earned $5.90

Collected $2,216.00

Totals $25,368.90

Credit :

Service Charge $30.00

Balance (adjusted) $25,338.90

Totals $25,368.90

Then, Prepare a Bank Reconciliation Statement

Note : This proves the accuracy of the above cash balance

Bank Reconciliation Statement

Balance as per Bank Statement $10,419.90

Add Outstanding Checks ($4,139.00 + $7,320.00) $11,459.00

Less Unpresented Checks ($2,037.00 + $1,423.00) ($3,460.00)

Balance as per Cash Book $25,338.90