Question

8-27 An examination of the accounting records and the bank statement of the Evans Com- pany at March 31 provides the following information: (a) The Cash account has a balance of $6,351.98. (b) The bank statement shows a bank balance of $3,941.83. (c) The March 31 cash receipts of $3,260.95 were deposited in the bank at the end of that day but were not recorded by the bank until April 1. (d) Checks issued and mailed in March but not included among the checks listed as paid on the bank statement were as follows: Check No. 706 Check No. 717 $869.38 212.00

Answer 1

Ans(1): Computation of Bank Reconciliation on March 31 are as follow:

• We will start with cash account balance and adjustment will be made one by one to reach Balance as per bank statement.
• On March 31, cash receipts has been deposited in bank so we have added balance in our books but bank has not recorded till March 31, therefore we have to less cash account balance with the amount of $3260.95
• Check issued but not listed as paid on bank statement worth $1081.38, we have deducted from cash account balance but bank has not reduced balance so we have to add back the same amount.
• Bank service charge of $30 for march has been deducted by bank which has not been recorded in our cash book so we have to deduct the same.
• Check received from the customer was returned which we have added to cash balance so we will reduce balance with $185
• Interest earned on company's checking account was added on bank statement which we have not recorded so we have to add $20.42 to cash account balance.
• Company has recorded check issued for $562 as $526 therefore we have recorded with less amount of $36 so we have to less this amount from our cash book.

$ $6,351.98 PARTICULARS Cash account balance Add: Check issued but not listed as paid in bank statement Interest earned on company's checking account $1,081.38 $ 20.42 Less: Cash deposited in bank but not recorded by bank Bank service charge Check received from customer returned $3,260.95 $ 30.00 $ 185.00 check no 701 recorded with wrong amount | $ 36.00 Balance as per Bank statements $3,941.83

Ans(2): Computation of ending balance in the Cash Account are as follow:

Cash Account 6,351.98 By Bank service charge To Balb/f $ $ 30.00 To Interest Earned $ 20.42 By Customer(check Return) $ 185.00 By Rent $ 36.00 By Bal c/f $ 6,121.40 $ 6,372.40 $6,372.40