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Wright Company's cash account shows a $29,300 debit balance and its bank statement shows $27,600 on deposit at the close of business on May 31. a.The May 31 bank statement lists $190 in bank service charges; the company has not yet recorded the cost of these services. b.Outstanding checks as of May 31 total $6,500. c.May 31 cash receipts of $7,100 were placed in the bank’s night depository after banking hours and were not recorded on the May 31 bank statement. d.In reviewing the bank statement, a $490 check written by Smith Company was mistakenly drawn against Wright’s account. e.The bank statement shows a $420 NSF check from a customer; the company has not yet recorded this NSF check. Prepare its bank reconciliation using the above information.Prepare a bank reconciliation for the company using the above information

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Answer:

Bank Reconciliation Statement:

Calculation of Adjusted cash Balance on 31 May:

Cash Balance:                              $ 29,300

less: Bank Charges                      $ (190)

less: NSF Check                           $ (420)

Adjusted cash Book Balance      $ 28,690

Add: Outstanding Checks           $ 6,500

Less: Uncleared Checks              $ 7,100

Revised Cash Book Balance (A) $ 28,090

Bank Statement Balance               $ 27,600

Add: Error by Bank                         $   490    

Adjusted Bank Balance (B)           $ 28,090

Explanation:

Bank reconciliation is a company document prepared in order to reconcile difference between balance as per cash book and balance as per bank statement.

The difference arise because of two reasons:

  • Timing differences (Outstanding checks and Uncleared checks
  • Error and Omissions. (Bank charges -NSF)

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