Bank Reconciliations

Class Example Solutions

  1. Prepare a Bank Reconciliation given the following information for the month of September 2018.
  1. The September 31, 2018 balance of the Cash Account on the General Ledger is $9,342.
  1. The September 31, 2018 balance of Cash on the Bank Statement is $4,657.
  1. A Customer’s Check was returned as insufficient funds for $150.
  1. Outstanding Checks for the month of September were $4,265.
  1. The Bank Statement indicated the collection of a Note Receivable of $2,000 and Interest of $120.
  1. Deposits of $8,730 recorded in the General Ledger for September were not recorded by the bank until October 1, 2018.
  1. The bank encoded a check incorrectly and cleared the check for $660. The correct amount for which the check should have cleared is $690.
  1. The bookkeeper made an error in the accounting records and recorded a customer deposit of $1,800 twice.
  1. The bank neglected to post a customer deposit of $500. The deposit was correctly recorded in the accounting records.
  1. A check written in September cleared the bank for its correct amount of $260; however, the check was erroneously recorded in the accounting records as $360.
  1. A bank service charge for September of $20 was reported on the bank statement.

BookBank

Ending Balance$9,342Ending Balance$4,657

NSF Check( $150)OS Checks ($4,265)

Note Collection$2,000Deposits in Transit$8,730

Interest on Note Coll. $ 120Bank Error ($ 30)

Book Error($1,800)Bank Error $ 500

Book Error $ 100

Bank Service Charge ( $20)

Adjusted Balance$9,592Adjusted Balance$9,592

Adjusting Entries from September 2018Bank Reconciliation

DRCR

1)Accounts Receivable150

Cash150

To record NSF check returned

2)Cash2,120

Note Receivable2,000

Interest Revenue 120

To record collection of Note Principal and Interest Earned

3)Accounts Receivable1,800

Cash1,800

To reverse collection of customer deposit recorded twice in error

4)Cash100

Accounts Payable100

To correct error in recording amount paid on account

5)Bank Service Charge Expense20

Cash20

To record Bank Service Charge expense for September 2018

Bank Reconciliations

Group Work Exercise Solutions

  1. The following information for ABC Co. is available for the month of May 2018.
  1. The May 31, 2018 balance of the Cash Account on the General Ledger is $10,410.62.
  1. The May 31, 2018 balance of Cash on the Bank Statement is $12,092.66.
  1. Not included on the bank statement is a $1,440 deposit made by ABC late on May 31st.
  1. A Customer’s Check was returned as insufficient funds [NSF] for $520.
  1. Outstanding Checks for the month of September were $5,185.19.
  1. The Bank Statement indicated the collection of a Note Receivable of $1000 and Interest of $90.
  1. Interest earned on the checking account and added to ABC’s account during May was $62.50.
  1. The bank neglected to post a customer deposit of $730.25. The deposit was correctly recorded in the accounting records.
  1. A customer’s check in payment of services - $210.60 was deposited to ABC’s bank account in May. The check cleared the bank for its correct amount of $210.60; however, the check was erroneously recorded in the accounting records as $2,106.00.
  1. A bank service charge for May of $70 was reported on the bank statement.

Required:

  1. Prepare a Bank Reconciliation for May of 2018.
  2. Prepare all necessary Adjusting Entries to correct the general ledger cash account balance.

BookBank

Ending Balance$10,410.62Ending Balance$12,092.66

NSF Check (520)OS Checks (5,185.19)

Note Collection 1,000Deposits in Transit 1,440

Interest on Note Coll. 90

Interest on Acct 62.50Bank Error 730.25

Book Error (1,895.40)

Bank Service Charge (70)

Adjusted Balance$9,077.72Adjusted Balance$ 9,077.72

Adjusting Entries from May 2018 Bank Reconciliation

DRCR

1)Accounts Receivable520

Cash520

To record NSF check returned

2)Cash1,090

Note Receivable1,000

Interest Revenue 90

To record collection of Note Principal and Interest Earned

3)Cash62.50

Interest Revenue62.50

To record Interest Earned on Bank Account balance in May 2018

4)Bank Service Charge Expense70

Cash70

To record Bank Service Charge expense for May 2018

5)Accounts Receivable1,895.40

Cash1,895.40

To correct cash account for Book Error