Bank Reconciliation The following bank reconciliation was prepared as of June 30, 20Y7: Poway Co. Bank Reconciliation For the Month Ended June 30, 20Y7 Cash balance according to bank statement         $16,020   Add: Outstanding Check No. 1067     $590                Outstanding Check No.1106     480                Outstanding Check No.1110     1,000                Outstanding Check No.1113     950                  Total additions         3,020   Deduct: Deposit of June 30 not recorded by bank         (6,700) Adjusted balance         $12,340 Cash balance according to company’s records         $9,020   Add: Proceeds of note collected by bank: Face value      $5,000               Proceeds of note collected by bank: Interest     250               Service charges     10                 Total additions         5,260   Deduct: Check returned because of insufficient funds     $860                    Error in recording June 17 deposit of $8,150 as $1,850     6,300                      Total deductions         (7,160) Adjusted balance         $7,120 a.   Identify the errors in the following bank reconciliation: Item Correct Heading Should be June 30, 20Y7  Outstanding checks Should be deducted from balance per bank statement  Deposit of June 30 Should be added to balance per bank statement  Service charges Should be deducted from balance per company's records  Error in June 17 deposit Should be added to balance per company's records  Adjusted balance per the bank Does not equal the adjusted balance per company      Feedback   Remember that a bank reconciliation is a record for a specific day rather than a period. Also, keep in mind that deposits in transit are added to the bank statement balance and outstanding checks are subtracted. Items that come from credit memos like collections of notes or interest by the bank are added to the company cash balance and debit memo items like bank service charges and NSF checks are subtracted from the company's cash balance. Errors should be added or deducted from the bank or company section of the reconciliation depending on the nature of the error. If the bank made the error, the bank section would be adjusted. If the company made the error, the company section would be adjusted. b.  Prepare a corrected bank reconciliation. Poway Co. Bank Reconciliation June 30, 20Y7 Cash balance according to bank statement   $fill in the blank 777ed2f74010fb8_1 Add: Deposit in transit on June 30    fill in the blank 777ed2f74010fb8_3 Deduct: Outstanding Check No. 1067  $fill in the blank 777ed2f74010fb8_5   Outstanding Check No. 1106  fill in the blank 777ed2f74010fb8_7   Outstanding Check No. 1110  fill in the blank 777ed2f74010fb8_9   Outstanding Check No. 1113  fill in the blank 777ed2f74010fb8_11   Total deductions   fill in the blank 777ed2f74010fb8_12 Adjusted balance   $fill in the blank 777ed2f74010fb8_13 Cash balance according to company's records   $fill in the blank 777ed2f74010fb8_14   $fill in the blank 777ed2f74010fb8_16     fill in the blank 777ed2f74010fb8_18   Total additions   fill in the blank 777ed2f74010fb8_19   $fill in the blank 777ed2f74010fb8_21     fill in the blank 777ed2f74010fb8_23   Total deductions   fill in the blank 777ed2f74010fb8_24 Adjusted balance   $fill in the blank 777ed2f74010fb8_25

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Bank Reconciliation

The following bank reconciliation was prepared as of June 30, 20Y7:

Poway Co.
Bank Reconciliation
For the Month Ended June 30, 20Y7
Cash balance according to bank statement         $16,020
  Add: Outstanding Check No. 1067     $590    
           Outstanding Check No.1106     480    
           Outstanding Check No.1110     1,000    
           Outstanding Check No.1113     950    
             Total additions         3,020
  Deduct: Deposit of June 30 not recorded by bank         (6,700)
Adjusted balance         $12,340
Cash balance according to company’s records         $9,020
  Add: Proceeds of note collected by bank: Face value      $5,000    
          Proceeds of note collected by bank: Interest     250    
          Service charges     10    
            Total additions         5,260
  Deduct: Check returned because of insufficient funds     $860    
               Error in recording June 17 deposit of $8,150 as $1,850     6,300    
                 Total deductions         (7,160)
Adjusted balance         $7,120

a.  

Identify the errors in the following bank reconciliation:

Item Correct
Heading Should be June 30, 20Y7 
Outstanding checks Should be deducted from balance per bank statement 
Deposit of June 30 Should be added to balance per bank statement 
Service charges Should be deducted from balance per company's records 
Error in June 17 deposit Should be added to balance per company's records 
Adjusted balance per the bank Does not equal the adjusted balance per company 

 

 
Feedback
 

Remember that a bank reconciliation is a record for a specific day rather than a period. Also, keep in mind that deposits in transit are added to the bank statement balance and outstanding checks are subtracted. Items that come from credit memos like collections of notes or interest by the bank are added to the company cash balance and debit memo items like bank service charges and NSF checks are subtracted from the company's cash balance. Errors should be added or deducted from the bank or company section of the reconciliation depending on the nature of the error. If the bank made the error, the bank section would be adjusted. If the company made the error, the company section would be adjusted.

b.  Prepare a corrected bank reconciliation.

Poway Co.
Bank Reconciliation
June 30, 20Y7
Cash balance according to bank statement   $fill in the blank 777ed2f74010fb8_1
Add: Deposit in transit on June 30    fill in the blank 777ed2f74010fb8_3
Deduct: Outstanding Check No. 1067  $fill in the blank 777ed2f74010fb8_5  
Outstanding Check No. 1106  fill in the blank 777ed2f74010fb8_7  
Outstanding Check No. 1110  fill in the blank 777ed2f74010fb8_9  
Outstanding Check No. 1113  fill in the blank 777ed2f74010fb8_11  
Total deductions   fill in the blank 777ed2f74010fb8_12
Adjusted balance   $fill in the blank 777ed2f74010fb8_13
Cash balance according to company's records   $fill in the blank 777ed2f74010fb8_14
  $fill in the blank 777ed2f74010fb8_16  
  fill in the blank 777ed2f74010fb8_18  
Total additions   fill in the blank 777ed2f74010fb8_19
  $fill in the blank 777ed2f74010fb8_21  
  fill in the blank 777ed2f74010fb8_23  
Total deductions   fill in the blank 777ed2f74010fb8_24
Adjusted balance   $fill in the blank 777ed2f74010fb8_25
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