Question

The balance in Happ, Inc.’s general ledger Cash account was $24,860 at September 30, before reconciliation. The September 30 balance shown in the bank statement was $22,260. Reconciling items included deposits in transit, $2,400; bank service charges, $140; NSF check written by a customer and returned with the bank statement, $900; outstanding checks, $760; and interest credited to the account during September but not recorded on the company’s books, $80.

Required: a. Show the reconciling items in a horizontal model that should be prepared to reflect the reconciling items for Happ, Inc., at September 30.

b. What is the amount of cash to be included in the September 30 balance sheet for the company’s bank account?

Answer 1

a)

Bank Reconciliation

Bank		Books
Balance, September 30	$22,260	Balance, September 30	$24,860
Add:		Add:
Deposit in transit	$2,400	Interest revenue earned	80
Less:		Less:
Outstanding checks	- 760	NSF check	- 900
		Bank service charges	- $140
Adjusted bank balance	$23,900	Adjusted book balance	$23,900

b)

cash to be included in the September 30 balance sheet = $23,900

Kindly give a positive rating if you are satisfied with the answer. Feel free to ask if you have any doubt. Thanks.