Questions 1, 2 & 3 will use the following information: Using the following infor

Question

Questions 1, 2 & 3 will use the following information: Using the following information, prepare a bank reconciliation for Salem Co. for May 31, 2010. (a) The bank statement balance is $2,597. (b) The cash account balance is $2,680. (c) Outstanding checks amounted to $703. (d) Deposits in transit are $732. (e) The bank service charge is $25. (f) Interest added to the checking account by the bank is $7. (g) A check drawn for $59 was incorrectly charged by the bank as $95. Questions 4 & 5 will use the following information: The bank statement for Marley Co. indicates a balance of $10,000.50 on June 30, 2010. The cash account in the depositor's records had a balance of $4,677.10. Prepare a bank reconciliation on the basis of the following reconciling items: (a) Cash sales of $342 had been erroneously recorded as $324. (b) Deposits in transit not recorded by bank, $700. (c) Bank debit memorandum for service charges, $30. (d) Bank credit memorandum for note collected by bank, $2,050, including $50 interest. (e) Bank debit memorandum for $207.40 NSF (not sufficient funds) check from Alice Martin, a customer. (f) Checks outstanding, $4,192.80.

Explanation / Answer

(a) The bank statement balance is $2,597.
- .(c) Outstanding checks amounted to $703.
+ (d) Deposits in transit are $732.
+ 36 (g) A check drawn for $59 was incorrectly charged by the bank as $95.
= 2,662
(b) The cash account balance is $2,680.
- .(e) The bank service charge is $25.
+ (f) Interest added to the checking account by the bank is $7
= 2,662

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