Question

The bookkeeper at Jefferson Company has not reconciled the bank statement with the Cash account, saying, "I don’t have time." You have been asked to prepare a reconciliation and review the procedures with the bookkeeper. The April 30, Current Year, bank statement and the April ledger account for cash showed the following (summarized):
Bank Statement
Checks Deposits Balance
Balance, April 1, 2014 $37400 32,700
Deposits during Apri 1,340 70,100
Interest collected 71,440
Checks cleared during April $45,600 25,840
NSF check-A. B. Wright 270 25,570
Bank service charges 230 25,340
Balance, April 30, 2014 25,340
Cash (A)
Apr. 1 Balance 24,700
Apr Deposits 43,500
Apr. Checks written 42,100
A comparison of checks written before and during April with the checks cleared through the bank showed outstanding checks at the end of April of $4,500. No deposits in transit were carried over from March, but a deposit was in transit at the end of April.

Answer 1

Answer:

Bank balance April 30 $25,340

+ deposits in transit $6,100

- outstanding checks $4,500

Adjusted total $26,940

Account balance April 30 $26,100

+ interests $1,340

- NSF check $270

- bank service fees $230

Adjusted total $26,940

In order to verify that we have reconciled our bank statement correctly, we must compare it to the reconciliation of the cash account. If both balances are the same (in this case $26,940), then we did the reconciliation correctly.

Required journal entries:

to record NSF check

Dr Accounts receivable 270

    Cr Cash 270

to record earned interests

Dr Cash 1,340

    Cr Interest revenue 1,340

to record bank fees

Dr Bank service fees 230

    Cr Cash 230