Question

The John Company maintains a checking account at the Bank of the Cumberland. The bank provides a bank statement along with canceled checks on the last day of each month. The October 31, 2013, bank statement included the following information:

Balance October 1, 2013                             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, 2013                             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 furniture was incorrectly recorded by the company as a $50 disbursement. The bank correctly processed the check during October.

Prepare a bank reconciliation for the month of October for both the company and the bank

Answer 1

John Company
Bank Reconciliation statement for the month of October
Bank Balance to Corrected BalanÎ
Balance per bank statement	$38,140
Add: Outstanding Deposits	4,224
Less: Outstanding Checks	(5,620)
Corrected cash balance	$ 36,744
Book Balance to Corrected Balance
Balance per books	$42,544
Add: Error in check recording	(450)
Less: Service charges	(350)
Less: NSF checks	(1,600)
Less: Automatic monthly loan payment	(3,400)
Corrected cash balance	$ 36,744