Question

The cash account for American Medical Co. at April 30 indicated a balance of $12,135. The bank statement indicated a balance of $14,150 on April 30. Comparing the bank statement and the accompanying canceled checks and memos with the records revealed the following reconciling items: Checks outstanding totaled $5,090. A deposit of $5,310, representing receipts of April 30, had been made too late to appear on the bank statement. The bank collected $2,760 on a $2,620 note, including interest of $140. A check for $440 returned with the statement had been incorrectly recorded by American Medical Co. as $400. The check was for the payment of an obligation to Targhee Supply Co. for a purchase on account. A check drawn for $50 had been erroneously charged by the bank as $500. Bank service charges for April amounted to $35

Answer 1

American Medical Co.
Bank Reconciliation Statement
Month ended April 30
Cash balance as per Bank Statement, April 30		$14,150
Add:
A deposit not appeared on the bank statement.	$5,310
Bank Error: A check for $440 incorrectly recorded as $400.	$40
Bank Error: A check drawn for $50 erroneously charged as $500.	$450
Bank Service Charges	$35
		$5,835
Less:
Uncleared Checks	$5,090
The bank collected $2,760 (including interest of $140)	$2,760
		$7,850
Cash Balance as per Company books as on Apr 30		$12,135

Notes

1. A deposit of $5,310, representing receipts of April 30, had been made too late to appear on the bank statement.

That is in company cash account it is already credited as receipts, therefore to make it par with bank statement we have to add it in statement also.

2.   A check for $440 returned with the statement had been incorrectly recorded by American Medical Co. as $400.

In company cash account when a check received it is credited as $440 but due to bank error in statement it only showing $400 therefore we have to add back $40 now

3. Check Drawn for $50 only in company account but due to error bank has debited from there account an extra $450 (500-50).

Which is to be added back now to match with company books.

4.   Bank service charges which is generally only shown in bank statement therefore in to arrive at

company cash account we have to add back

5. Uncleared checks are check issued to creditors, but bank has not cleared it therefore now deducted.

6. Bank has collected $2760 (with interest $140). Which is to be deducted to arrive at company books of accounts.

As this transaction is not credited in cash account of company.