Question

The cash account for Deaver Consulting at October 31, 2016, indicated a balance of $9,810. The bank statement indicated a balance of $12,360 on October 31, 2016 Comparing the bank statement and the accompanying canceled checks and memos with the records revealed the following reconciling items: a. Checks outstanding totaled $4,450. b. A deposit of $4,640, representing receipts from October 31, had been made too late to appear on the bank statement. C. The bank had collected $2,410 on a note left for collection. The face of the note was $2,290. d. A check for $440 returned with the statement had been incorrectly recorded by Deaver Consulting as $400. The check was for the payment of an obligation to Oxford Office Supplies Co. for the purchase of office supplies on account. e. A check drawn for $460 had been incorrectly charged by the bank as $60. f. Bank service charges for October amounted to $30. Instructions: 1. Prepare a bank reconciliation. Deaver Consulting Bank Reconciliation October 31, 2016 Cash balance according to bank statement Add: Deposit of October 31, not recorded by bank 12.360 4,640 17,000 4,450 Deduct: Outstanding checks Deduct: Error in recording check by the company as $400 instead of $440 400 4,850 Adjusted balance 12,150 Cash balance according to Deaver Consulting $ 9,810 Check My Work 2 more Check My Work uses remaining Previous

Answer 1

1. Bank Reconciliation

Balance as per Bank Statement		$12,360
Add: Deposit in transit		$4,640
		17,000
Less: Error in recording cheque	$400
Less: Cheques were drawn outstanding	$4,450	$4,850
Balance as per cash account		$9,810
Add: Note collected by bank		$2,410
		12,220
Less: Error in recording cheque ret	$40
Less: Bank Service charges	$30	$70
Correct balance		$12,150

	Cash+	Notes rec=	Acct. Pable+	Reatined earnigs
	+ 2,410	- 2,290		120
Statement of Cashflows					Income Statement
Operating activities $ 2,410					Interest revenue $120
	Cash+	Notes rec=	Acct. Pable+	Reatined earnigs
	-70		-40	-30
Statement of Cashflows					Income Statement
Operating activities ($70)					Service expenses (30)