# Bank Reconciliation Example**Background:**Nolan Company's cash account shows a $22,352 debit balance, while its bank statement reports $21,332 on deposit as of June 30. The discrepancies between the company’s books and the bank statement are due to the following reasons:- **a.** Outstanding checks on June 30 total $3,713.- **b.** Bank service charges of $41 have not yet been recorded by the company.- **c.** A $90 check was mistakenly recorded as $99 in the company’s books.- **d.** Deposits of $4,724 were made after banking hours on June 30, not appearing in the bank statement.- **e.** A $23 credit for interest earned was added to the company’s cash by the bank, which has not been recorded by the company.**Requirement:**Prepare a bank reconciliation using the information provided.**Steps for Bank Reconciliation:**1. **Bank statement balance:** Start with the $21,332 as per the bank statement. 2. **Add:** - Deposits in transit*: $4,724 3. **Deduct:** - Outstanding checks*: $3,713 - **Adjusted bank balance:** Results from adding deposits in transit to and deducting outstanding checks from the bank statement balance.4. **Book balance:** Start with the $22,352 as per the company’s books.5. **Add:** - Error correction*: Difference due to check error: $9 - Interest earned but not recorded*: $23 6. **Deduct:** - Bank service charges*: $41 - **Adjusted book balance:** Results from adding the interest and error correction to and deducting service charges from the book balance.**Conclusion:**Once the adjustments are made for reconciling items (such as outstanding checks, bank service charges, errors, deposits in transit, and interest earned), the adjusted bank balance and the adjusted book balance should match. This reconciled balance ensures that both records accurately reflect the financial position as of June 30.*Note: All calculations must ensure consistency and should be verified for accuracy.*This example demonstrates the importance of reconciling bank statements with book records to ensure financial accuracy and integrity.

Bank reconciliation is the statement which is prepared by the entity for the purpose of reconciling…

Nolan Company's cash account shows a $22,352 debit balance and its bank statement shows $21,332 on deposit at the close of business on June 30. a. Outstanding checks as of June 30 total $3,713. b. The June 30 bank statement lists $41 in bank service charges; the company has not yet recorded the cost of these services. c. In reviewing the bank statement, a $90 check written by the company was mistakenly recorded in the company's books as $99. d. June 30 cash receipts of $4,724 were placed in the bank's night depository after banking hours and were not recorded on the June 30 bank statement. e. The bank statement included a $23 credit for interest earned on the company's cash in the bank. The company has not yet recorded interest earned. Required: Prepare a bank reconciliation using the above information. $22,352 $21,332 90 3,713 41 99 4,724 23

Nolan Company's cash account shows a $22,352 debit balance and its bank statement shows $21,332 on deposit at the close of business on June 30. a. Outstanding checks as of June 30 total $3,713. b. The June 30 bank statement lists $41 in bank service charges; the company has not yet recorded the cost of these services. c. In reviewing the bank statement, a $90 check written by the company was mistakenly recorded in the company's books as $99. d. June 30 cash receipts of $4,724 were placed in the bank's night depository after banking hours and were not recorded on the June 30 bank statement. e. The bank statement included a $23 credit for interest earned on the company's cash in the bank. The company has not yet recorded interest earned. Required: Prepare a bank reconciliation using the above information. $22,352 $21,332 90 3,713 41 99 4,724 23

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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