Question

The bank statement for Broom Company showed a $200 bank balance at the end of April. A comparison of Broom Company’s bank statement and accounting records disclosed a $40 deposit in transit and $55 of outstanding checks at month-end. The bank statement enclosures included a $5 NSF check and a credit memo for $10 of interest. The balance per Broom Company’s books was $180. ?Prepare a bank reconciliation for the month of April?Prepare the necessary journal entries to make the balance in the cash account correct

Answer 1

Bank reconciliation :

Balance as per bank statement	200
Add: Deposit in transit	40
	240
Less: Outstanding checks	-55
Adjusted Cash balance	185
Balance as per cash book	180
Add: Interest	10
	190
Less; NSF check	-5
Adjusted cash balance	185

Journal entry :

Date	account & explanation	debit	credit
	Cash	10
	Interest revenue		10
	(To record interest)
	Account receivable	5
	Cash		5
	(To record NSF checks)