October 4th 2016
Supplemental Instruction
Iowa State University / Leader: / Vince
Course: / ACCT 284
Instructor: / Clem
1)Which of the following is an item on the bank reconciliation that the bank doesn’t know about?
a)Outstanding checks
b)Interest deposited
c)NSF checks
d)Service charges
2)Which of the following items is not an item on the bank reconciliation that would require an adjustment to bring the Cash account up-to-date?
a)Service charges
b)Deposits in transit
c)Company error
d)NSF check
3)What is the proper order of the steps in preparing a bank reconciliation?
1. Determine the impact of book errors
2. Identify the outstanding checks
3. Record other transactions on the bank statement
4. Identify the deposits in transit
a)1, 2, 3, 4
b)2, 1, 4, 3
c)4, 3, 2, 1
d)4, 2, 3, 1
4)Cyclone Company’s bank statement had an ending balance of $10,300 on September 30, 2011. The company’s general ledger showed a balance of $24,000 in its Cash account on that date. During the reconciliation process, the following information was noted:
-A comparison of checks written before and during September with the paid checks included with the bank statement showed outstanding checks at the end of September of $33,600.
-A comparison of deposits made with those listed on the bank statement showed that deposits of $33,295 were in transit on September 30th. The comparison also revealed an error made in recording a deposit of a check received from a customer on account. The $1,500 deposit was correctly listed on the bank statement, but was recorded on the company’s books at $5,100.
-A monthly service charge of $40 and interest of $135 were listed on the statement.
-A credit memo in the amount of $4,400 for an electronic funds transfer from a customer appeared on the bank statement.
-A customer check in the amount of $14,900 was returned to the company in the September bank statement; the check had been stamped NSF.
Using the format illustrated in the textbook and shown in class, use this page to prepare a bank reconciliation as of September 30, 2011.
Bank StatementBook Cash Account
End Balance25,000Balance25,300
NSF800Deposit in Transit900
Service Charge25Check Outstanding200
Interest250
Electronic Deposit75
Bank StatementCash Account
Ending Balance50,000Balance48,000
NSF350Deposit in Transit2,000
Service Charge25Checks Outstanding3,600
Interest100
Electronic Transfer875
Reconciled Amounts
Bank StatementCash Account
Ending Balance20,000Balance20,400
NSF600Deposit in Transit400
Service Charge25Checks Outstanding600
Interest50
Electronic Deposit75