Question

An accounting clerk for Chesner Co. prepared the following bank reconciliation:

Chesner Co. Bank Reconciliation July 31, 2016

1. Cash balance according to company's records $11,100.00
2. Add: Outstanding checks $3,585.00
3. Error by Chesner Co. in recording Check No. 1056 as $950 instead of $590 360.00
4. Note for $12,000 collected by bank, including interest 12,480.00 16,425.00
5. $27,525.00
6. Deduct: Deposit in transit on July 31 $7,200.00
7. Deduct: Bank service charges 25.00 7,225.00
8. Cash balance according to bank statement $20,300.00
A. From the data prepared by the accounting clerk, prepare a new bank reconciliation for Chesner Co., using the format shown in the illustrative problem in the text. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries.

B. If a balance sheet were prepared for Chesner Co. on July 31, 2016, what amount should be reported for cash?

Amount Descriptions - Adjusted balance - Bank error in charging Check No. 1056 as $590 instead of $950 - Bank error in charging Check No. 1056 as $950 instead of $590 - Bank service charges - Deposit in transit on July 31 - Error in recording Check No. 1056 as $590 instead of $950 - Error in recording Check No. 1056 as $950 instead of $590 - Note for $12,000 collected by bank, including interest - Outstanding checks

Answer 1

Answer:

Explanation:

Bank reconciliation

Chesner Co.  

July 31,2016  

Cash balance according to bank statement $20,300

Adjustments:  

Add:Deposit in transit on July 31 7200

Less:Outstanding checks -3585

Adjusted balance as per bank $23,915

Cash balance according to company’s records 11,100

Adjustments:  

Add:Note for $12,000 collected by bank, including interest 12,480

Less:Bank service Charges -25

Add:Error in recording Check No. 1056 as $950 instead of $590 360

Adjusted balance as per Books 23,915

B. $23,915 should be reported to cash