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Financial & Managerial Accounting

13th Edition
Carl Warren + 2 others
ISBN: 9781285866307

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BuyFindarrow_forward

Financial & Managerial Accounting

13th Edition
Carl Warren + 2 others
ISBN: 9781285866307
Textbook Problem

Bank reconciliation

Identify the errors in the following bank reconciliation;

Poway Co Bank Reconciliation For the Month Ended June 30, 2016
Cash balance according to bank statement     $16,185
Add outstanding checks:      
No 1067   $ 575  
1106   470  
1110   1,050  
1113   910 3,005
      $19,190
Deduct deposit of June 30 not recorded by bank     6,600
Adjusted balance     $12,590
Cash balance according to company's records     $ 8,985
Add: Proceeds of note collected by bank: Principal $6,000    
Interest 300 $6,300  
Service charges   15 6,315
      $15,300
Deduct: Check returned because of insufficient funds   $ 890  
Error in recording June 17 deposit of $7,1 50 as $1,750   $,400 6,290
Adjusted balance     $ 9,010

a.

To determine

Bank Reconciliation Statement: Bank statement is prepared by bank. The company maintains its own records from its perspective. This is why the cash balance per bank and cash balance per books seldom agree. Bank reconciliation is the statement prepared by company to remove the differences and disagreement between cash balance per bank and cash balance per books.

To identify: The errors in the bank reconciliation.

Explanation

  1. 1. The heading should be entered as “June 30, 2016” and must not be entered as “For the Month Ended June 30, 2016”.
  2. 2. Checks outstanding is deducted from the bank balance.
  3. 3. Errors in recording the deposit of $7,150 made on June 17 are �...

b.

To determine

To prepare: New bank reconciliation for P Co.

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