Question

The following information is for Oriole Ltd. in July: 1. Cash balance per bank, July 31, $10,630. 2. Cash balance per books, July 31, $8,786. 3. Bank service charge, $40. 4. Deposits in transit, $1,992. 5. Electronic receipts from customers in payment of their accounts, $1,024, not previously recorded by the company. 6. Outstanding cheques, $2,402. 7. Cheque #373 was correctly written in the amount of $490 but was incorrectly recorded by the company's bookkeeper as $940. The cheque was written for the purchase of office supplies. (a) Prepare the bank reconciliation at July 31. (List items that increase balance as per bank & books first.) ORIOLE LTD Bank Reconciliation July 31 $

Answer 1

Items which affects cash balance per bank should be adjusted against it such as deposit in transit and checks outstanding. These are the two trasactions which affects cash balance per bank.

Error in recording check and bank service charge affects only cash balance per books, as check is correctly honoured by the bank and bank service charge is also recoreded in bank. Hence, it is adjusted against cash balance per books.

ORIOLE LTD. Bank Reconciliation July 31 Cash balance per bank Add: Deposit in transit $ 10,630.00 $ 1,992.00 $ 12,622.00 $ 2,402.00 $ 10,220.00 Less: Checks outstanding Adjusted Bank Balance Cash balance per books Add: Electronic receipts not recorded by the company Incorrect recording of check #373 $ 8,786.00 $ 1,024.00 $ 450.00 ($ 940 - $ 490) $ 10,260.00 $ 40.00 $ 10,220.00 Less: Bank Service charge Adjusted Book Balance