1 The bank statement for Gatlin Co indicates a balance of 77

1. The bank statement for Gatlin Co. indicates a balance of $7,735.00 on June 30, 2010 After the journals for June had been posted, the cash account had a balance of $4,098.00 Prepare a bank reconciliation on the basis of the following reconciling items: (a) Cash sales of $742 had been erroneously recorded in the cash receipts journal as (b) Deposits in transit not recorded by bank, $425.00 (c) Bank debit memo for service charges, $35.00 (d) Bank credit memo for note collected by bank, $2.475 including $75 interest. (e Bank debit memo for s25600 NSF (not sufficient funds) check from Janice Smith, a customer (D Ch ecks outstanding, sl 86000. 1.418. 11M I

Solution

Bank Reconciliation June 30 Cash balance according to bank statement 7735 Add deposits in transit not recorded by bank 425 8160 Deduct outstanding checks 1860 Adjusted balance 6300 Cash balance according to company’s records 4098 Add: Note collected by bank, including$75 interest 2475 Error in recording cash sales of$742 as $724 18 2493 6591 Deduct: NSF check from Janice Smith 256 Bank service charges 35 291 Adjusted balance 6300