Question

Buick, Inc. maintains a checking account at the Bank of Colorado. The bank provides a bank statement along with canceled checks on the last day of each month. The October 31, 2021, bank statement included the following information: Balance, October 1, 2021 $ 32,690 Deposits 86,000 Checks processed (75,200 ) Service charges (350 ) NSF checks (1,600 ) Monthly loan payment deducted directly by bank from account (includes $400 in interest) (3,400 ) Balance, October 31, 2021 $ 38,140 The company’s general ledger cash (checking) account had a balance of $42,544 at the end of October. Deposits outstanding totaled $4,224, and all checks written by the company were processed by the bank except for those totaling $5,620. In addition, a check for $500 for the purchase of office supplies was incorrectly recorded by the company as a $50 disbursement. The bank correctly processed the check during October. Required: Prepare a bank reconciliation for the month of October. Indicate the amount of the adjusted cash balance.

Answer 1

Bank
Balance per bank statement	$38,140
Add: Deposits in Transit	4,224
	42,364
Less: Outstanding Checks	(5,620)
Adjusted Bank balance	$ 36,744
Books
Balance per books	$42,544
Less: Error in check recording	(450)
Less: Service charges	(350)
Less: NSF checks	(1,600)
Less: Automatic monthly loan payment	(3,400)
Adjusted Book balance	$ 36,744

Date	General Journal	Debit	Credit
Oct 31	Office Supplies	450
	Service charges	350
	Accounts receivables	1,600
	Loan Payable	3,000
	Interest expense	400
	Cash		5,800

Adjusted Balance: $36,744