Question

Wright Company's cash account shows a $30,100 debit balance and its bank statement shows $28,400 on deposit at the close of business on May 31.

1. The May 31 bank statement lists $230 in bank service charges; the company has not yet recorded the cost of these services.
2. Outstanding checks as of May 31 total $6,900.
3. May 31 cash receipts of $7,500 were placed in the bank’s night depository after banking hours and were not recorded on the May 31 bank statement.
4. In reviewing the bank statement, a $530 check written by Smith Company was mistakenly drawn against Wright’s account.
5. The bank statement shows a $340 NSF check from a customer; the company has not yet recorded this NSF check.

Prepare its bank reconciliation using the above information.

Answer 1

bank reconciliation as on 31st May

Bank statement balance		$28,400	Book Balance		$30,100
Add:			Add:
Deposit of May 31	$7,500
Bank error	$530
		$8,030[$7,500+530]
		$36,430[$28,400+8,030]
Deduct:			Deduct:
Outstanding Checks	$6,900		Bank service charges	$230
			NSF checks	$340
		$6,900			$570
Adjusted Bank Balance		$29,530[$36,430-6,900]	Adjusted book balance		$29,530[30,100-570]

deposits of $7,500 will be recorded in cash book but in bank it is yet pending so we shall add it to bank statement balance

in bank statement error has been made so we shall add it back in bank statement balance

checks outstanding are not yet presented in bank so we shall deduct it from bank statement balance.

bank service charges are not given effect into books so it will be deducted from cash book balance

NSF checks are checks not cleared due to insufficient funds so we shall deduct it from cash book balance.

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