PROBLEM 2 BANK RECONCILIATION The bank statement for Cates Company indicates a b

Question

PROBLEM 2 BANK RECONCILIATION The bank statement for Cates Company indicates a balance of $1,730 on June 30. The cash balance per books had a balance of $799 on this date. The following information pertains to the bank transactions for the company Deposit of $260, representing cash receipts of June 30, did not appear on the bank statement. 2. Outstanding checks totaled $340. 3. Bank service charges for June amounted to $25 4. The bank collected a note receivable for the company for $900 plus $56 interest revenue 5. An NSF check for $80 from a customer was returned with the statement. Instructions a. Prepare a bank reconciliation for June 30. b. Prepare any adjusting entries necessary as a result of the bank reconciliation.

Explanation / Answer

Answer a)

Note : Bank reconciliation statement is made to indentify and reconclie the causes of diiference between cash balance as per bank and cash balance as per our books. Now , there are two type of differences : -

Answer b

Note : Enteries appear  in Pass Book but not appearing in the Cash Book ( info 3 , 4, 5) are only to be considered as adjusting entries as for other entries ie Enteries appear in Cash Book but not appearing in Pass Book (1 & 2 ) , journal entries had already been passed in our books.

Journal Entries

Cates Company Bank Reconciliation June 30 Cash balance as per bank $1,730 Add : Deposit in transit -- 1 $260 Less : Out standing Checks -- 2 ($340) Adjusted Cash balance as per books $ 1,650 Cash balance as per books $799 Add : Note receivable collected by bank plus interest -- 4 $956 Less : Bank service charges -- 3 ($25) Less: NSF check -- 5 ($80) Adjusted Cash balance as per books 1,650

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