Bank Reconciliation The following bank reconciliation was prepared as of June 30, 20Y7: Poway Co. Bank Reconciliation For the Month Ended June 30, 20Y7 Cash balance according to bank statement $16,020 Add: Outstanding Check No. 1067 $590 Outstanding Check No.1106 480 Outstanding Check No.1110 1,000 Outstanding Check No.1113 950 Total additions 3,020 Deduct: Deposit of June 30 not recorded by bank (6,700) Adjusted balance $12,340 Cash balance according to company’s records $9,020 Add: Proceeds of note collected by bank: Face value $5,000 Proceeds of note collected by bank: Interest 250 Service charges 10 Total additions 5,260 Deduct: Check returned because of insufficient funds $860 Error in recording June 17 deposit of $8,150 as $1,850 6,300 Total deductions (7,160) Adjusted balance $7,120 a. Identify the errors in the following bank reconciliation: Item Correct Heading Should be June 30, 20Y7 Outstanding checks Should be deducted from balance per bank statement Deposit of June 30 Should be added to balance per bank statement Service charges Should be deducted from balance per company's records Error in June 17 deposit Should be added to balance per company's records Adjusted balance per the bank Does not equal the adjusted balance per company Feedback Remember that a bank reconciliation is a record for a specific day rather than a period. Also, keep in mind that deposits in transit are added to the bank statement balance and outstanding checks are subtracted. Items that come from credit memos like collections of notes or interest by the bank are added to the company cash balance and debit memo items like bank service charges and NSF checks are subtracted from the company's cash balance. Errors should be added or deducted from the bank or company section of the reconciliation depending on the nature of the error. If the bank made the error, the bank section would be adjusted. If the company made the error, the company section would be adjusted. b. Prepare a corrected bank reconciliation. Poway Co. Bank Reconciliation June 30, 20Y7 Cash balance according to bank statement $fill in the blank 777ed2f74010fb8_1 Add: Deposit in transit on June 30 fill in the blank 777ed2f74010fb8_3 Deduct: Outstanding Check No. 1067 $fill in the blank 777ed2f74010fb8_5 Outstanding Check No. 1106 fill in the blank 777ed2f74010fb8_7 Outstanding Check No. 1110 fill in the blank 777ed2f74010fb8_9 Outstanding Check No. 1113 fill in the blank 777ed2f74010fb8_11 Total deductions fill in the blank 777ed2f74010fb8_12 Adjusted balance $fill in the blank 777ed2f74010fb8_13 Cash balance according to company's records $fill in the blank 777ed2f74010fb8_14 $fill in the blank 777ed2f74010fb8_16 fill in the blank 777ed2f74010fb8_18 Total additions fill in the blank 777ed2f74010fb8_19 $fill in the blank 777ed2f74010fb8_21 fill in the blank 777ed2f74010fb8_23 Total deductions fill in the blank 777ed2f74010fb8_24 Adjusted balance $fill in the blank 777ed2f74010fb8_25

Bank Reconciliation The following bank reconciliation was prepared as of June 30, 20Y7: Poway Co. Bank Reconciliation For the Month Ended June 30, 20Y7 Cash balance according to bank statement $16,020 Add: Outstanding Check No. 1067 $590 Outstanding Check No.1106 480 Outstanding Check No.1110 1,000 Outstanding Check No.1113 950 Total additions 3,020 Deduct: Deposit of June 30 not recorded by bank (6,700) Adjusted balance $12,340 Cash balance according to company’s records $9,020 Add: Proceeds of note collected by bank: Face value $5,000 Proceeds of note collected by bank: Interest 250 Service charges 10 Total additions 5,260 Deduct: Check returned because of insufficient funds $860 Error in recording June 17 deposit of $8,150 as $1,850 6,300 Total deductions (7,160) Adjusted balance $7,120 a. Identify the errors in the following bank reconciliation: Item Correct Heading Should be June 30, 20Y7 Outstanding checks Should be deducted from balance per bank statement Deposit of June 30 Should be added to balance per bank statement Service charges Should be deducted from balance per company's records Error in June 17 deposit Should be added to balance per company's records Adjusted balance per the bank Does not equal the adjusted balance per company Feedback Remember that a bank reconciliation is a record for a specific day rather than a period. Also, keep in mind that deposits in transit are added to the bank statement balance and outstanding checks are subtracted. Items that come from credit memos like collections of notes or interest by the bank are added to the company cash balance and debit memo items like bank service charges and NSF checks are subtracted from the company's cash balance. Errors should be added or deducted from the bank or company section of the reconciliation depending on the nature of the error. If the bank made the error, the bank section would be adjusted. If the company made the error, the company section would be adjusted. b. Prepare a corrected bank reconciliation. Poway Co. Bank Reconciliation June 30, 20Y7 Cash balance according to bank statement $fill in the blank 777ed2f74010fb8_1 Add: Deposit in transit on June 30 fill in the blank 777ed2f74010fb8_3 Deduct: Outstanding Check No. 1067 $fill in the blank 777ed2f74010fb8_5 Outstanding Check No. 1106 fill in the blank 777ed2f74010fb8_7 Outstanding Check No. 1110 fill in the blank 777ed2f74010fb8_9 Outstanding Check No. 1113 fill in the blank 777ed2f74010fb8_11 Total deductions fill in the blank 777ed2f74010fb8_12 Adjusted balance $fill in the blank 777ed2f74010fb8_13 Cash balance according to company's records $fill in the blank 777ed2f74010fb8_14 $fill in the blank 777ed2f74010fb8_16 fill in the blank 777ed2f74010fb8_18 Total additions fill in the blank 777ed2f74010fb8_19 $fill in the blank 777ed2f74010fb8_21 fill in the blank 777ed2f74010fb8_23 Total deductions fill in the blank 777ed2f74010fb8_24 Adjusted balance $fill in the blank 777ed2f74010fb8_25

Corporate Financial Accounting

14th Edition

ISBN:9781305653535

Author:Carl Warren, James M. Reeve, Jonathan Duchac

Publisher:Carl Warren, James M. Reeve, Jonathan Duchac

Chapter7: Internal Control And Cash

Section: Chapter Questions

Problem 7.3BE

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Question

Bank Reconciliation

The following bank reconciliation was prepared as of June 30, 20Y7:

Poway Co.
Bank Reconciliation
For the Month Ended June 30, 20Y7
Cash balance according to bank statement		$16,020
Add: Outstanding Check No. 1067	$590
Outstanding Check No.1106	480
Outstanding Check No.1110	1,000
Outstanding Check No.1113	950
Total additions		3,020
Deduct: Deposit of June 30 not recorded by bank		(6,700)
Adjusted balance		$12,340
Cash balance according to company’s records		$9,020
Add: Proceeds of note collected by bank: Face value	$5,000
Proceeds of note collected by bank: Interest	250
Service charges	10
Total additions		5,260
Deduct: Check returned because of insufficient funds	$860
Error in recording June 17 deposit of $8,150 as $1,850	6,300
Total deductions		(7,160)
Adjusted balance		$7,120

Identify the errors in the following bank reconciliation:

Item	Correct
Heading	Should be June 30, 20Y7
Outstanding checks	Should be deducted from balance per bank statement
Deposit of June 30	Should be added to balance per bank statement
Service charges	Should be deducted from balance per company's records
Error in June 17 deposit	Should be added to balance per company's records
Adjusted balance per the bank	Does not equal the adjusted balance per company

Feedback

Remember that a bank reconciliation is a record for a specific day rather than a period. Also, keep in mind that deposits in transit are added to the bank statement balance and outstanding checks are subtracted. Items that come from credit memos like collections of notes or interest by the bank are added to the company cash balance and debit memo items like bank service charges and NSF checks are subtracted from the company's cash balance. Errors should be added or deducted from the bank or company section of the reconciliation depending on the nature of the error. If the bank made the error, the bank section would be adjusted. If the company made the error, the company section would be adjusted.

b. Prepare a corrected bank reconciliation.

Poway Co.
Bank Reconciliation
June 30, 20Y7
Cash balance according to bank statement		$fill in the blank 777ed2f74010fb8_1
Add: Deposit in transit on June 30		fill in the blank 777ed2f74010fb8_3
Deduct: Outstanding Check No. 1067	$fill in the blank 777ed2f74010fb8_5
Outstanding Check No. 1106	fill in the blank 777ed2f74010fb8_7
Outstanding Check No. 1110	fill in the blank 777ed2f74010fb8_9
Outstanding Check No. 1113	fill in the blank 777ed2f74010fb8_11
Total deductions		fill in the blank 777ed2f74010fb8_12
Adjusted balance		$fill in the blank 777ed2f74010fb8_13
Cash balance according to company's records		$fill in the blank 777ed2f74010fb8_14
	$fill in the blank 777ed2f74010fb8_16
	fill in the blank 777ed2f74010fb8_18
Total additions		fill in the blank 777ed2f74010fb8_19
	$fill in the blank 777ed2f74010fb8_21
	fill in the blank 777ed2f74010fb8_23
Total deductions		fill in the blank 777ed2f74010fb8_24
Adjusted balance		$fill in the blank 777ed2f74010fb8_25

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