Question

The cash balances per books for the Meson Company on November 30, 2003 and December 31, 2003, are $3,625 and $10,967 respectively. The following checks and receipts were recorded on the books for the month of December 2003:

                          Checks                                                                      Receipts              

No.      Amount           No.      Amount                                  Amount                         Date

17            $3,503         22               $   425                             $   27,300                      12/05

18             5,505         23                9,300                                 15,000                      12/21

19                740         24                  575                                   3,200                      12/27

20            12,500         25                7,555                                   2,150                      12/31

21                205

In addition, the bank statement for the month of December is presented below:

     Balance                  Deposits and Credits                    Checks and Debits                   Balance

     Last Statement          No.       Total Amount                No.       Total Amount          This Statement

      $3,231                   5             $48,000                     11          $42,380                     $8,851

     ________________________________________________________________________________________

     Checks and other debits                                                          Deposits            Date          Balance

     __________________________________________________

     No.      Amount       No.       Amount         No.      Amount

     ________________________________________________________________________________________

     14             605       19              740                                             1,200           12/01                $3,086

     18          5,595       24              575         23            9,300            27,300           12/08               $14,916

     17          3,503       25            7,555                                             1,300           12/15                $5,158

     20        12,500                      1,545 DM                                     15,000           12/23                $6,113

                     440 NSF              22 SC                                             3,200           12/31                $8,851

     ________________________________________________________________________________________

     Symbols: NSF (Not sufficient funds)    SC (Service charge)    CM (Credit Memo)    DM (Debit Memo)                                        

     ________________________________________________________________________________________

All outstanding checks from November cleared the bank in December except for check #15 for $201. Check #18 for equipment was correctly recorded by the bank. The NSF check was from A. Claude, a customer, in settlement of an account receivable. An entry has not been made for the NSF check. Included in the bank’s deposits is a $1,300 deposit incorrectly credited to the company’s account. The deposit should have been posted to the credit of Mason Company. The debit memo is for the collection of a note payable including interest of $45 that has been accrued. The bank service charge is $22.00.

Instructions

(a)     Prepare a bank reconciliation at December 31.

Answer 1

Solution a:

Meson Company
Bank Reconciliation - December 31
Bank's Cash balance		Company's cash balance
Particulars	Amount	Particulars	Amount
Ending balance as per Bank Statements	$8,851.00	Ending Balance as per cash books	$10,967.00
Additions:		Additions:
Outstanding Deposits	$2,150.00
Deductions:		Deductions:
Outstanding Checks (Check 15, 21, 22) ($201 + $205 + $425)	$831.00	NSF Cheque	$440.00
Bank Error	$1,300.00	Service charge	$22.00
		Incorrect recording of check 18	$90.00
		Notes payable	$1,545.00
Up to date cash balance as per bank	$8,870.00	Up to date cash balance as per books	$8,870.00