Asked by mackenzie newland on Jun 17, 2024
Verified
The cash account for Santiago Co. on May 31 indicated a balance of $20,915. The March bank statement indicated an ending balance of $25,645. Comparing the bank statement, the canceled checks, and the accompanying memos with the records revealed the following reconciling items:
a. Checks outstanding totaled $5,975.
b. A deposit of $3,796 had been made too late to appear on the bank statement.
c. A check for $1,482 returned with the statement had been incorrectly recorded as $482. The check was originally issued to pay on account.
d. The bank collected $4,515 on a note left for collection of which $515 was interest revenue.
e. Bank service charges for May amounted to $70.
f. A check for $894 was returned by the bank because of insufficient funds.
Prepare a bank reconciliation as of May 31. Journalize the necessary entries.
Santiago Co.Bank ReconciliationMay 31 Santiago~ Co.\\Bank~ Reconciliation\\May~ 31\\\begin{array}{|l|l|l|}\hline ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~& ~~~~~~~~~~~~& ~~~~~~~~~~~~~~~~~~~~~\\\hline & & \\\hline & & \\\hline & & \\\hline & & \\\hline & & \\\hline & & \\\hline & & \\\hline & & \\\hline & & \\\hline & & \\\hline\end{array}Santiago Co.Bank ReconciliationMay 31
Journal Date Description Post. Ref. Debit Credit Journal\\\begin{array}{l}\begin{array} { | l | l | l | l | l | } \hline \text { Date } & \text { Description } & \begin{array} { c } \text { Post. } \\\text { Ref. }\end{array} & \text { Debit } & \text { Credit } \\\hline & & & & \\\hline & & & & \\\hline & & & & \\\hline & & & & \\\hline & & & & \\\hline & & & & \\\hline\end{array}\end{array}Journal Date Description Post. Ref. Debit Credit
Bank Reconciliation
A process used to verify the accuracy of bank statements with a company's financial records, identifying any discrepancies.
Checks Outstanding
Checks that have been written and recorded in the check issuer's accounting system but have not yet been cashed or cleared by the bank.
Deposit In Transit
Funds that have been sent to a bank but have not yet been processed and added to the account balance.
- Define and describe the components involved in a bank reconciliation and its relevance.
Verified Answer
AA
Alqalam AcadamyJun 18, 2024
Final Answer :
?? Santiago Co.Bank ReconciliationMay 31 Cash balance according to bank statement $25,645 Add deposit not recorded by bank 3,796$29,441 Deduct outstanding checks 5,975‾ Adjusted balance $ 23,466‾ Cash balance according to company’s records $20,915 Add proceeds of note and interest collected by bank 4,515‾$25,430 Deduct error in recording check $1,000 Bank service charges 70 Nonsufficient funds check 894‾1,964‾ Adjusted balance $ 23,466‾Santiago~ Co.\\Bank~ Reconciliation\\May~ 31\\\begin{array}{|l|c|c|}\hline \text { Cash balance according to bank statement } & & \$ 25,645 \\\hline \text { Add deposit not recorded by bank } & & 3,796 \\\hline & & \$ 29,441 \\\hline \text { Deduct outstanding checks } & & \underline{5,975} \\\hline \text { Adjusted balance } & & \underline{\textbf{\$ 23,466}} \\\hline\\\hline \text { Cash balance according to company's records } & & \$ 20,915 \\\hline \text { Add proceeds of note and interest collected by bank } & & \underline{4,515} \\\hline & & \$ 25,430 \\\hline \text { Deduct error in recording check } & \$ 1,000 & \\\hline \text { Bank service charges } & 70 & \\\hline \text { Nonsufficient funds check } & \underline{894} & \underline{1,964} \\\hline \text { Adjusted balance } & & \underline{\textbf{\$ 23,466}} \\\hline\end{array}Santiago Co.Bank ReconciliationMay 31 Cash balance according to bank statement Add deposit not recorded by bank Deduct outstanding checks Adjusted balance Cash balance according to company’s records Add proceeds of note and interest collected by bank Deduct error in recording check Bank service charges Nonsufficient funds check Adjusted balance $1,00070894$25,6453,796$29,4415,975$ 23,466$20,9154,515$25,4301,964$ 23,466 Journal Date Description Post. Ref. Debit Credit May 31 Cash 4,515 Note Receivable 4,000 Interest Revenue 51531 Accounts Payable 1,000 Bank Service Charge Expense 70 Accounts Receivable 894 Cash 1,964Journal \\\begin{array}{l}\begin{array} { | r | c | r | r | r | } \hline \text { Date } & { \text { Description } } & \begin{array} { r } \text { Post. } \\\text { Ref. }\end{array} & \text { Debit } & \text { Credit } \\\hline \text { May 31 } & \text { Cash } & & 4,515 & \\\hline & \text { Note Receivable } & & & 4,000 \\\hline & \text { Interest Revenue } & & & 515 \\\hline & & & & \\\hline 31 & \text { Accounts Payable } & & 1,000 & \\\hline & \text { Bank Service Charge Expense } & & 70 & \\\hline & \text { Accounts Receivable } & & 894 & \\\hline & \text { Cash } & & & 1,964 \\\hline\end{array}\end{array}Journal Date May 31 31 Description Cash Note Receivable Interest Revenue Accounts Payable Bank Service Charge Expense Accounts Receivable Cash Post. Ref. Debit 4,5151,00070894 Credit 4,0005151,964
Learning Objectives
- Define and describe the components involved in a bank reconciliation and its relevance.