Question

Use the following partial bank reconciliation for Pumpkin Inc. to answer the next question. $51,800 Balance per Bank Deposits in transit Outstanding checks $50,000 Balance per books 10,000 Interest earned 8,000 Service charge INSF $52,000 Adjusted balance 20 120 Adjusted balance How much interest did Pumpkin earn? $340 $60 $300 $120

Answer 1

Bank Reconciliation is a process of identifying the difference that exist between the company's bank balance as per bank statement supplied by bank and cash balance as per company's accounting records. Balance as per Bank Add: Depoist in transit Less: outstanding checks $50,000 Balance as per books $10,000 Add: Interest earned $8,000 Less: Service Charge Less: NSF $52,000 Adjusted Balance $51,800 $340 $20 $120 $52,000 Adjusted Balance Adjusted Book Balance will be equal to adjusted bank balance Adjusted Book Balance $52,000 Add: Service Charge $20 Add: NSF $120 Less: Balance as per Books $51,800 Interest earned $340 Interest earned is $340