Question

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The following information is available to reconcile Branch Company’s book balance of cash with its bank statement cash balance as of July 31.

  

1. On July 31, the company’s Cash account has a $25,180 debit balance, but its July bank statement shows a $27,263 cash balance.
2. Check No. 3031 for $1,400, Check No. 3065 for $476, and Check No. 3069 for $2,168 are outstanding checks as of July 31.
3. Check No. 3056 for July rent expense was correctly written and drawn for $1,270 but was erroneously entered in the accounting records as $1,260.
4. The July bank statement shows the bank collected $9,500 cash on a note for Branch. Branch had not recorded this event before receiving the statement.
5. The bank statement shows an $805 NSF check. The check had been received from a customer, Evan Shaw. Branch has not yet recorded this check as NSF.
6. The July statement shows a $14 bank service charge. It has not yet been recorded in miscellaneous expenses because no previous notification had been received.
7. Branch’s July 31 daily cash receipts of $10,632 were placed in the bank’s night depository on that date but do not appear on the July 31 bank statement.

Required:

1. Prepare the bank reconciliation for this company as of July 31.

	BRANCH COMPANY Bank Reconciliation July 31 Bank statement balance Book balance Add: Add: Deduct: Deduct: Adjusted bank balance Adjusted book balance

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Answer 1

Bank Reconciliation

Bank statement Balance		27,263	Book Balance		25,180
Add:			Add:
Deposits in transit	10,632	10,632	Note proceeds	9500	9,500
Deduct:			Deduct:
Outstanding checks	4044	4044	Error in recording	10
			NSF Check	805
			Bank charges	14	829
Adjusted bank balance		33,851	Adjusted book balance		33,851

In bank Reconciliation, errors and omissions in the books are corrected in the books while errors in bank statement are corrected in the bank statement