BANK RECONCILIATION STATEMENT
The bank statement for Laird Company, shows a balance per bank of $15,907.45
on April 30, 2017. On this date the balance of cash per books is $11,589.45. Using
the four reconciliation steps, Laird determines the following reconciling items.
Step 1. Deposits in transit: April 30 deposit (received by bank on $2,201.40
May 1).
Step 2. Outstanding checks:
No. 453, $3,000.00;
No. 457, $1,401.30;
No. 460, $1,502.70. 5,904.00
Step 3. Errors: Laird wrote check no. 443 for $1,226.00 and the bank
correctly paid that amount. However, Laird recorded the check as 36.00
$1,262.00.
Step 4. Bank memoranda:
a. Debit—NSF check from J. R. Baron for $425.60 425.60
b. Debit—Charge for printing company checks $30.00 30.00
c. Credit—Collection of note receivable for $1,000 plus interest earned
$50, less bank collection fee $15.00 1,035.00
Solution:
Laird Company
Bank Reconciliation
April 30, 2017
Cash balance per bank statement $ 15,907.45
Add: Deposits in transit 2,201.40
18,108.85
Less: Outstanding checks
No. 453 $3,000.00
No. 457 1,401.30
No. 460 1,502.70
(5,904.00)
Adjusted cash balance per bank $12,204.85
Cash balance per books $11,589.45
Add: Collection of note receivable $1,000, plus
interest earned $50, less collection fee $15 $1,035.00
Error in recording check no. 443 36.00
1,071.00
12,660.45
Less: NSF check 425.60
Bank service charge 30.00
(455.60)
Adjusted cash balance per books $12,204.85
ENTRIES FROM BANK RECONCILIATION
The company records each reconciling item used to determine the adjusted cash
balance per books. If the company does not journalize and post these items,
the Cash account will not show the correct balance. Laird Company would
make the following entries on April 30.
Collection of Note Receivable. This entry involves four accounts. Assuming that
the interest of $50 has not been accrued and the collection fee is charged to
Miscellaneous Expense, the entry is:
Cash 1,035.00
Miscellaneous Expense 15.00
Notes Receivable 1,000.00
Apr. 30
Interest Revenue 50.00
(To record collection of note receivable
by bank)
Book Error. The cash disbursements journal shows that check no. 443 was a
payment on account to Andrea Company, a supplier. The correcting entry is:
Cash 36.00
Apr. 30 Accounts Payable—Andrea Company 36.00
(To correct error in recording check no. 443)
NSF Check. As indicated earlier, an NSF check becomes an account receivable to
the depositor. The entry is:
Accounts Receivable—J. R. Baron 425.60
Apr. 30 Cash 425.60
(To record NSF check)
Bank Service Charges. Depositors debit check printing charges (DM) and other
bank service charges (SC) to Miscellaneous Expense because they are usually
nominal in amount. The entry is:
Miscellaneous Expense 30.00
Apr. 30 Cash 30.00
(To record charge for printing company checks)
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