Question

The following data were gathered to use in reconciling the bank account of Reddan Company:

Balance per bank	$17,800
Balance per company records	9,075
Bank service charges	25
Deposit in transit	2,900
Note collected by bank with $200 interest	4,900
Outstanding checks	6,750

	Instructions
a.	What is the adjusted balance on the bank reconciliation?
b.	Journalize any necessary entries for Reddan Company based on the bank reconciliation. Refer to the Chart of Accounts for exact wording of account titles.

Answer 1

Solution a:

Reddan Company
Bank Reconciliation
Balance per Bank	$17,800
Add: Deposit in transit	$2,900
	$20,700
Less: Outstanding checks	$6,750
Adjusted Bank Balance	$13,950
Cash Balance per Company's Records	$9,075
Note collected (including interest)	4900
	$13,975
Less: bank Service charges	$25
Adjusted Cash Balance	$13,950

Solution b:

Journal Entries
S.No	Particulars	Debit	Credit
1	Cash Dr	$4,900
	To Notes Receivable		$4,700
	To Interest Revenue		$200
	(To record Note collected by bank)
2	Miscellaneous Expenses Dr	$25
	To Cash		$25
	(To record bank service charges debited by bank)