Question

The cash account for American Medical Co. at April 30 indicated a balance of $334,985. The bank statement indicated a balance of $388,600 on April 30. Comparing the bank statement and the accompanying canceled checks and memos with the records revealed the following reconciling items: A.Checks outstanding totaled $61,280. B.A deposit of $42,500, representing receipts of April 30, had been made too late to appear on the bank statement.

Answer 1

Missing word "The bank collected $42,000 on a $40,000 note, including interest of $2,000. A check for $7,600 returned with the statement had been incorrectly recorded by American Medical Co. as $760. The check was for the payment of an obligation to Targhee Supply Co. for a purchase on account. A check drawn for $240 had been erroneously charged by the bank as $420. Bank service charges for April amounted to $145. Instructions: Prepare a bank reconciliation."

Bank reconciliation statement

Particulars Amount ($)

Balance as per bank statement 388,600

Add: Deposit in transit 42,500

Add: Error in recording the check (420-240) 180 431,280

Less: Outstanding checks (61,280)

Adjusted balance as per Bank statement 370,000

Bank reconciliation statement

Particulars Amount ($)

Balance as per books 334,985

Add: Note collected 40,000

Add: Interest collected 2,000 376,985

Less: Error in recording check (7,600-760) (6,840)

Less: Service charges levied (145)

Adjusted balance as per books 370,000