Question

On October 31", T Company's general ledger shows $50,000 for the checking account balance. The company's cash receipts for the month which haven't cleared the bank yet are $30,000 and checks written by the company this month which have not cleared the bank total $22,000 While comparing the bank statement with the general ledger T determined the bank erroneously withdrew $1,000 from T's checking account. The bank statement also reported service fees of $25, interest Tearned on their account of $10, and an automatic withdrawal of $1,200 for the rent payment. The bank statement also showed the bank had collected a $1,500 note receivable for T. The company noted that one of the checks they wrote was incorrectly recorded in the general ledger, it was written for $900 but they had subtracted $600 from their checking account. The bank statement reported the company checking account balance was $40,985 on October 31st. Answer the following based on performing a bank reconciliation for T Company. 1. How should the company treat the bank error? (add/sub from bank/general ledger) 2. How should the company treat the company error? (add/sub from bank/ general ledger) 3. What is the general ledger cash balance before reconciliation? $ 4. What is the bank statement balance before reconciliation? $ 5. What is the general ledger balance after reconciliation? $

please aid me and thank you in advance

Answer 1

Answer​

1. The company treat the bank error in two ways as following:-

​​​​​​a) if the bank makes error as deduction from account then company subtract from Bank.

b) if the bank makes error as addition in account then company add in bank

2. The company treat the comoany error in two ways as following:-

​​​​​​a) if the company makes error as deduction from bank ledger and bank has not make any deduction then company add in bank ledger.

b) if the company makes error as addition in bank ledger and bank has not make any addition then company subtract in bank ledger.

3. $ 50000 is the general cash ledger balance before reconciliation.

4. $ 40985 is the bank statement balance before reconciliation.

5. The General Cash Ledger balance after reconciliation is as follows:

$ 50000 Balance as per Genual Cash Ledger Addi Cheques written but not presented 22000 for Payment lo Interest farned Collected receivable note by bank 1500 23570 less: Cash receipts are not cleared by bank 30000 Erroneously withdrew by bank 1000 Sesvice fees by bank Automatic withdraw 1200 chaque incorrectly recorded by lo. 300 38525 General Cash Ledger after Balance af reconciliation 40985