Question

Rick Hall owns a card shop, Hall’s Cards. The following cash information is available for the month of August 2018:

As of August 31, the bank statement shows a balance of $13,470. The August 31 unadjusted balance in the Cash account of Hall’s Cards is $9,528. A review of the bank statement revealed the following information:

1. A deposit of $1,210 on August 31, 2018, does not appear on the August bank statement.

2. It was discovered that a check to pay for baseball cards was correctly written and paid by the bank for $3,810 but was recorded on the books as $4,710.

3. When checks written during the month were compared with those paid by the bank, three checks amounting to $4,320 were found to be outstanding.

4. A debit memo for $68 was included in the bank statement for the purchase of a new supply of checks.

Required

Prepare a bank reconciliation at the end of August showing the true cash balance.

Answer 1

Bank Reconciliation Statement of Hall's Cards.

Unadjusted Balance in Cash Account of Hall's Cards = $ 9,528

Add:

1. Check for baseball cards for $ 3,810 wrongly recorded in the books as $ 4,710 ( the difference to be added back 4,710 -3,810) $ 900

2. Checks written during the month but outstanding $4,320

Total after additions $14,748

Less :

1. Deposit not yet cleared by the bank . $1,210

2. Debit memo for purchase of new supply of checks $68

Total after deductions $13,470

Balance as per Bank Statement $13,470

Hence it is reconciled.