Question

Question 2 Tim Wong operates a FedEx Kinko's store. He has just received the monthly bank statement at May 31, 2014 from Royal Bank of Canada, and the statement shows an ending balance of $595. Listed on the statement are an EFT customer collection of $300, a service charge of $12, two NSF cheques totalling $120, and a $9 charge for printed cheques. In reviewing his cash records, Wong identifies outstanding cheques totalling $603 and a May 31 deposit in transit of $1,788. During May, he recorded a $290 cheque for the salary of a part-time employee as $29. Wong's Cash account shows a May 31 cash balance of $1,882. How much cash does Wong actually have at May 31?

Answer 1

Solution:

Bank Reconciliation Statement for Tim Wong’s FedEx Kinko’s Store:

Bank Reconciliation Statement
For the Month ended May 31, 2014
Balance as per bank statement		$595
Adjustments:
Deposit in transit	$1,788
Outstanding checks	($603)	$1,185
Adjusted bank balance		$1,780
Balance as per cash book		$1,882
Add: EFT customer collection	$300
Less: service charges	($12)
Less: NSF Checks	($120)
Less: check printer charges	($9)
Less: error in recording checks	($261)	($102)
Adjusted balance as per cash book		$1,780

Hence, the actual cash balance with Wong as on May 31, 2014 is $1,780.

Note: error in recording check –

Salary expense = $290

Actual recorded amount = $29

Hence, unrecorded salary expense = 290 – 29 = $261