8-27 An examination of the accounting records and the bank statement of the Evan

Question

8-27 An examination of the accounting records and the bank statement of the Evans Com- pany at March 31 provides the following information: (a) The Cash account has a balance of $6,351.98. (b) The bank statement shows a bank balance of $3,941.83. (c) The March 31 cash receipts of $3.260.95 were deposited in the bank at the end of that day but were not recorded by the bank until April I. (d) Checks issued and mailed in March but not included among the checks listed as paid on the bank statement were as follows: Check No. 706 $869.38 Check No. 717 212.00

Explanation / Answer

Evans Company

Evans Company

Bank Reconciliation Statement as on March 31

Bank balance

$3,941.83

Cash balance

$6,351.98

Add/(Deduct):

Add: Interest collected by bank

$20.42

Deposits in transit

$3,260.95

$6,372.40

Outstanding checks

($1,081.38)

Deduct:

Corrected Balance as per Bank

$6,121.40

NSF Check

($185)

Bank Charges

($30)

Recording error

($36)

($251)

Corrected cash balance

$6,121.40

Date

Account Titles and Explanation

Debit

Credit

31-Mar

Cash

$20.42

Interest Revenue

$20.42

(To record interest collected by bank)

31-Mar

Accounts Receivable

$185

Cash

$185

(To record NSF check)

31-Mar

Bank Service charges

$30

Cash

$30

(To record bank service charges for the month of March)

Corrected cash balance = $6,121.40

Evans Company

Bank Reconciliation Statement as on March 31

Bank balance

$3,941.83

Cash balance

$6,351.98

Add/(Deduct):

Add: Interest collected by bank

$20.42

Deposits in transit

$3,260.95

$6,372.40

Outstanding checks

($1,081.38)

Deduct:

Corrected Balance as per Bank

$6,121.40

NSF Check

($185)

Bank Charges

($30)

Recording error

($36)

($251)

Corrected cash balance

$6,121.40

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