Question

Option #1: Conducting a Bank Reconciliation Note: Part 1 is the bank reconciliation itself and Part 2 is for the adjusting entries. Instructions: Using the information below, complete the bank reconciliation for both the "book" and the "bank" sides and create all necessary adjusting journal entries. Details: • Cash balance per company's records as of July 31st, 2011 was $66,955. Bank statement balance as of July 31st, 2011 was $15,875. A deposit in the amount of $52,000 was deposited into the night depository of the bank on July 31st but did not get recorded in the July 31st bank statement balance. Check #354 in the amount of $575 and check # 365 in the amount of $1,500 were outstanding as of this bank

Answer 1

Part :1

Bank Reconciliation as of 31/07/2011

Bank statement balance	15875	Book balance of cash	66955
ADD		ADD
1) Deposit made but not yet credited in the bank account	52000	1) Interest credited by bank but not yet considered in cash statement	125
2) Check returned by the bank is not yet considered in cash balance	500	2) Collection from customer is considered in bank statement but not in cash statement	1000
3) Bank charges debited in the bank account but not yet entered in the cash statement	50	3) Wrong entry passed in cash statement (520-250)	270
4) Bank erroneously debited other companies check	5000	4) #364 and #365 check's considered in cash statement but outstanding at bank	2075
		5) Bank erroneously credited other companies check	3000
DEDUCT		DEDUCT
1) Interest credited by bank not yet considered in cash statement	125	1) deposit made but not yet credited in the bank account	52000
2) Collection from customer considered in bank statement but not in cash statement	1000	2) Check returned by bank is not yet considered in cash statement	500
3) Wrong entry passed in cash statement (520-250)	270	3) Bank charges not yet considered in cash statement	50
4) #354 and #365 Check's outstanding at Bank but entered in cash statement	2075	4) Bank erroneously debited other companies check	5000
5) Bank erroneously credited other companies check	3000
Reconciled balance as per books	66955	Reconciled balance as per bank statement	15875

PART : 2

Adjustment Entries

1) J. Smith Dr. 500

To bank a/c 500

( Being check returned by bank)

2) Bank charges Dr 50

To bank a/c 50

(Being bank charges deducted)

3) Bank a/c Dr 125

To interest income 125

( Being interest credited by bank)

4) Bank a/c Dr 1000

To H. Doe 1000

( Being collections made by bank)

5) Bank a/c Dr 270

To Expense / 'X' party 270

( Being error rectified)