Question

Cornerstone Exercise 4-16
Bank Reconciliation

Firebird Corp. prepares monthly bank reconciliations of its checking account balance. The bank statement for February 2019 indicated the following:

Balance, February 28, 2019	$87,392
Service charge for February	100
Interest earned during February	875
NSF check from Valerie Corp. (deposited by Firebird)	630
Note ($12,000) and interest ($350) collected from a customer of Firebird’s	12,350

An analysis of canceled checks and deposits and the records of Firebird Corp. revealed the following items:

Checking account balance per Firebird’s books	$73,260
Outstanding checks as of February 28	6,440
Deposit in transit at February 28	4,785
Error in recording check 7853 issued by Firebird	18

The correct amount of check #7853 is $797. It was recorded as a cash disbursement of $779 by mistake. The check was issued to pay for merchandise purchases. The check appeared on the bank statement correctly.

Required:

1. Prepare a bank reconciliation schedule at February 28, 2019, in proper form.

Firebird Corp.
Bank Reconciliation
February 28, 2019
Cash balance from bank statement		$
Add:
Less:
Adjusted cash balance		$
Cash balance from company records		$
Add:
	$
Less:
	$
Adjusted cash balance		$

2. What is the amount of cash that should be reported on the February 28, 2019 balance sheet?
$

Answer 1

Cash balance from bank statement		87,392
Add :
Deposits in transit	4785
Less :
Outstanding checks	6,440
Adjusted cash balance		85,737
Cash balance from company records		73,260
Add :
Interest earned	875
Note collected by bank	12,000
Interest on note	350
Less :
Error in recording check (797-779)	18
Service charge	100

NSF check	630
Adjusted cash balance		85,737

.

Amount of cash that should be reported

= 85,737