Question

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The following information is available to reconcile Branch Company’s book balance of cash with its bank statement cash balance as of July 31.

  

1. On July 31, the company’s Cash account has a $25,262 debit balance, but its July bank statement shows a $26,825 cash balance.
2. Check No. 3031 for $1,190, Check No. 3065 for $371, and Check No. 3069 for $1,958 are outstanding checks as of July 31.
3. Check No. 3056 for July rent expense was correctly written and drawn for $1,290 but was erroneously entered in the accounting records as $1,280.
4. The July bank statement shows the bank collected $6,000 cash on a note for Branch. Branch had not recorded this collection before receiving the statement.
5. The bank statement shows an $805 NSF check. The check had been received from a customer, Evan Shaw. Branch has not yet recorded this check as NSF.
6. The July statement shows a $9 bank service charge. It has not yet been recorded in miscellaneous expenses because no previous notification had been received.
7. Branch’s July 31 daily cash receipts of $7,132 were placed in the bank’s night depository on that date but do not appear on the July 31 bank statement.

Required:

1. Prepare the bank reconciliation for Branch Company as of July 31. Hint: list each outstanding check separately.

Answer 1

BRANCH COMPANY
Bank Reconciliation
July 31
Bank statement balance		26825	Book balance		25262
Add:			Add:
Deposit of July 31	7132		Proceeds of note	6000
		7132			6000
		33957			31262
Deduct:			Deduct:
Check No. 3031	1190		NSF check including fee	805
Check No. 3065	371		Service charge	9
Check No. 3069	1958		Error (Check 3056)	10
		3519			824
Adjusted bank balance		30438	Adjusted book balance		30438