On October 31, 2018, the bank statement for the checking account of Blockwood Vi

ID: 2402652 • Letter: O

Question

On October 31, 2018, the bank statement for the checking account of Blockwood Video shows a balance of $12,751, while the company’s records show a balance of $12,381. Information that might be useful in preparing a bank reconciliation is as follows:

Outstanding checks are $1,280.

The October 31 cash receipts of $835 are not deposited in the bank until November 2.

One check written in payment of utilities for $147 is correctly recorded by the bank but is recorded by Blockwood as a disbursement of $174.

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In accordance with prior authorization, the bank withdraws $560 directly from the checking account as payment on a note payable. The interest portion of that payment is $60 and the principal portion is $500. Blockwood has not recorded the direct withdrawal.

Bank service fees of $34 are listed on the bank statement.

A deposit of $577 is recorded by the bank on October 13, but it did not belong to Blockwood. The deposit should have been made to the checking account of Hollybuster Video, a separate company.

The bank statement includes a charge of $85 for an NSF check. The check is returned with the bank statement, and the company will seek payment from the customer.

1. Add to bank balance
2. Add to cash ledger balance
3. Subtract from bank balance
4. Subtract from cash ledger balance

For example, if the answer was "add to bank balance" you would input 1 as your answer.

c) and 4. Amount $___

5. d)

6. e)

7. f)

8. g)

9. Cash balance after reconciliation: $_____

10. The final step in a bank reconciliation is to record the journal entries to update the balance in the cash account. How much would cash be credited when recording the entry? $_______

Outstanding checks are $1,280.

The October 31 cash receipts of $835 are not deposited in the bank until November 2.

One check written in payment of utilities for $147 is correctly recorded by the bank but is recorded by Blockwood as a disbursement of $174.

Page 208

Bank service fees of $34 are listed on the bank statement.

A deposit of $577 is recorded by the bank on October 13, but it did not belong to Blockwood. The deposit should have been made to the checking account of Hollybuster Video, a separate company.

The bank statement includes a charge of $85 for an NSF check. The check is returned with the bank statement, and the company will seek payment from the customer.

Explanation / Answer

BANK RECONCILIATION STATEMENT :

Particulars

Amount

Balance as per cash book

12381

ADD :

a. Outstanding checks

1280

c. Check in payment of utilities

f. Deposit by bank

577

1884

14265

LESS :

b. Cash receipts not deposited in to bank

835

d. Withdraw from bank directly on prior authorisation

560

e. Bank service fees

g. NSF check charges

1514

Balance as per bank records

12751

a. 2;amount = 1280

b. 4;amount = 835

c. 2;amount = 27

d. 4;amount = 560

e. 4;amount = 34

f. 3;amount = 577

g. 4;amount = 85

9. cash balance after reconciliation = $12381

10. Cash be credited when recording entry = $1514