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Bank reconciliation The following data were gathered to use in reconciling the bank account of Reddan Company: Balance per bank $25,750 Balance per company records 19,140 Bank service charges 45 Deposit in transit 2,300 Note collected by bank with $200 interest 5,200 Outstanding checks 3,755 a. What is the adjusted balance on the hank reconciliation? b. Journalize any necessary entries for Reddan Company based on the bank reconciliation.

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Corporate Financial Accounting

15th Edition
Carl Warren + 1 other
Publisher: Cengage Learning
ISBN: 9781337398169

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Section
BuyFindarrow_forward

Corporate Financial Accounting

15th Edition
Carl Warren + 1 other
Publisher: Cengage Learning
ISBN: 9781337398169
Chapter 7, Problem 7.3BE
Textbook Problem
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Bank reconciliation

The following data were gathered to use in reconciling the bank account of Reddan Company:

Balance per bank $25,750
Balance per company records 19,140
Bank service charges 45
Deposit in transit 2,300
Note collected by bank with $200 interest 5,200
Outstanding checks 3,755

a. What is the adjusted balance on the hank reconciliation?

b. Journalize any necessary entries for Reddan Company based on the bank reconciliation.

(a)

To determine

Bank reconciliation statement: Bank statement is prepared by bank. The company maintains its own bank related records. Thus, cash balance per bank and cash balance per books seldom agree. Hence, 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 determine: The adjusted balance of Company R, by preparing a bank reconciliation statement

Explanation of Solution

Prepare bank reconciliation statement of Company R.

Company R
Bank Reconciliation
Cash balance according to bank statement $25,750
Add: Deposits in transit 2,300
28,050
Deduct: Outstanding checks (3,755)
Adjusted balance $24,295
Cash balance according to Company R 19,140
Add: Note collected by bank with $200 interest 5,200
24,340
Less: Bank service charge (45)
Adjusted balance $24,295

Table (1)

Description for the reconciling items:

  • The deposits which are not recorded by the bank are referred to as deposits in transit...

(b)

To determine

Journal entry: Journal entry is a set of economic events which can be measured in monetary terms. These are recorded chronologically and systematically.

Debit and credit rules:

  • Debit an increase in asset account, increase in expense account, decrease in liability account, and decrease in stockholders’ equity accounts.
  • Credit decrease in asset account, increase in revenue account, increase in liability account, and increase in stockholders’ equity accounts.

To journalize: The transaction that arise from bank reconciliation statement

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Chapter 7 Solutions

Corporate Financial Accounting
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