Question

Wright Company's cash account shows a $27,700 debit balance and its bank statement shows $26,000 on deposit at the close of business on May 31. The May 31 bank statement lists $110 in bank service charges; the company has not yet recorded the cost of these services. Outstanding checks as of May 31 total $5,700. May 31 cash receipts of $6,300 were placed in the bank’s night depository after banking hours and were not recorded on the May 31 bank statement. In reviewing the bank statement, a $410 check written by Smith Company was mistakenly drawn against Wright’s account. The bank statement shows a $580 NSF check from a customer; the company has not yet recorded this NSF check. Prepare its bank reconciliation using the above information.

Answer 1

Cash account reconciliation:

Cash account balance $27,700

subtract bank fees ($110)

subtract NSF check ($580)

Reconciled balance $27,010

Bank account reconciliation:

Bank account balance $26,000

subtract outstanding checks ($5,700)

add deposits in transit $6,300

add error with Smith Company check $410

Reconciled balance $27,010