Chapter 6
Bank Reconciliations
Class Example Solutions
1.
Prepare a Bank Reconciliation given the following information for the month of September 2014.
a. The September 31, 2014 balance of the Cash Account on the General Ledger is $9,342.
b. The September 31, 2014 balance of Cash on the Bank Statement is $4,657.
c. A Customer’s Check was returned as insufficient funds for $150.
d. Outstanding Checks for the month of September were $4,265.
e. The Bank Statement indicated the collection of a Note Receivable of $2,000 and Interest of
$120.
f. Deposits of $8,730 recorded in the General Ledger for September were not recorded by the bank
until October 1, 2014.
g. The bank encoded a check incorrectly and cleared the check for $660. The correct amount for
which the check should have cleared is $690.
h. The bookkeeper made an error in the accounting records and recorded a customer deposit of
$1,800 twice.
i. The bank neglected to post a customer deposit of $500. The deposit was correctly recorded in
the accounting records.
j. 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.
k. A bank service charge for September of $20 was reported on the bank statement.
Book
Bank
Ending Balance
NSF Check
Note Collection
Interest on Note Coll.
Book Error
Book Error
Bank Service Charge
$9,342
( $150)
$2,000
$ 120
($1,800)
$ 100
( $20)
Ending Balance
OS Checks
Deposits in Transit
Bank Error
Bank Error
$4,657
($4,265)
$8,730
($ 30)
$ 500
Adjusted Balance
$9,592
Adjusted Balance
$9,592
Adjusting Entries from September 2014 Bank Reconciliation
DR
1)
Accounts Receivable
Cash
CR
150
150
To record NSF check returned
2)
Cash
2,120
Note Receivable
Interest Revenue
2,000
120
To record collection of Note Principal and Interest Earned
3)
Accounts Receivable
Cash
1,800
1,800
To reverse collection of customer deposit recorded twice in error
4)
Cash
100
Accounts Payable
100
To correct error in recording amount paid on account
5)
Bank Service Charge Expense
Cash
20
20
To record Bank Service Charge expense for September 2014
Chapter 6
Bank Reconciliations
Group Work Exercise Solutions
1. The following information for ABC Co. is available for the month of May 2014.
a. The May 31, 2014 balance of the Cash Account on the General Ledger is $10,410.62.
b. The May 31, 2014 balance of Cash on the Bank Statement is $12,092.66.
c. Not included on the bank statement is a $1,440 deposit made by ABC late on May 31st.
d. A Customer’s Check was returned as insufficient funds [NSF] for $520.
e. Outstanding Checks for the month of September were $5,185.19.
f. The Bank Statement indicated the collection of a Note Receivable of $1000 and Interest of
$90.
g. Interest earned on the checking account and added to ABC’s account during May was $62.50.
h. The bank neglected to post a customer deposit of $730.25. The deposit was correctly recorded
in the accounting records.
i. 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.
j. A bank service charge for May of $70 was reported on the bank statement.
Required:
1. Prepare a Bank Reconciliation for May of 2014.
2. Prepare all necessary Adjusting Entries to correct the general ledger cash account balance.
Book
Bank
Ending Balance
$10,410.62
NSF Check
(520)
Note Collection
1,000
Interest on Note Coll.
90
Interest on Acct
62.50
Book Error
(1,895.40)
Bank Service Charge
(70)
Ending Balance
OS Checks
Deposits in Transit
Adjusted Balance
Adjusted Balance
$ 9,077.72
Bank Error
$12,092.66
(5,185.19)
1,440
730.25
$ 9,077.72
Adjusting Entries from May 2014 Bank Reconciliation
DR
1)
Accounts Receivable
Cash
CR
520
520
To record NSF check returned
2)
Cash
1,090
Note Receivable
Interest Revenue
1,000
90
To record collection of Note Principal and Interest Earned
3)
Cash
62.50
Interest Revenue
62.50
To record Interest Earned on Bank Account balance in May 2014
4)
Bank Service Charge Expense
Cash
70
70
To record Bank Service Charge expense for May 2014
5)
Accounts Receivable
Cash
1,895.40
To correct cash account for Book Error
1,895.40