The unadjusted cash account balance for Few Company at December 31, 2012 is $21,

ID: 2421641 • Letter: T

Question

The unadjusted cash account balance for Few Company at December 31, 2012 is $21,380. The bank statement showed an ending balance of $27,388 on that date. The following information is available:

bank service charge   $29
outstanding checks   $7,700
NSF check from customer   $540
Deposit in transit   $1321

Check #433 for the purchase of inventory was written correctly and paid by the bank correctly for $234, but was recorded on the books at $432. Few uses the perpetual inventory system.

Required:

Prepare a bank reconciliation as of December 31, 2012. Also, show which transactions will require adjustments to the cash account on the books and what accounts those transactions will affect.

Explanation / Answer

Answer

Bank Reconciliation statement of Few Company as of December 31, 2012

Figures in $

Particulars

Amount

Transaction requiring adjustments to cash account on books

Accounts affected by Transactions

unadjusted cash account balance for Few Company (Dr.)

21380

Bank Service charges

-29

Bank Charges A/c Dr. 29 , To Cash A/c Cr. 29

outstanding checks

7700

NSF check from customer

-540

Deposit in transit

-1321

Excess payment recorded for purchase of inventory

198

Cash A/c Dr. 198 ,

To Inventory A/c Cr. 198

(432-234)

Balance as per bank statement (Cr) (a+b+c+d+e+f)

27388