Problem 4-2B Prepare the bank reconciliation and record cash adjustments (LO5) [
ID: 2425054 • Letter: P
Question
Problem 4-2B Prepare the bank reconciliation and record cash adjustments (LO5)
[The following information applies to the questions displayed below.]
On October 31, 2015, the bank statement for the checking account of Blockwood Video shows a balance of $12,639, while the company’s records show a balance of $12,376. Information that might be useful in preparing a bank reconciliation is as follows:
One check written in payment of utilities for $146 is correctly recorded by the bank but is recorded by Blockwood as a disbursement of $164.
In accordance with prior authorization, the bank withdraws $659 directly from the checking account as payment on a note payable. The interest portion of that payment is $59 and the principal portion is $600. Blockwood has not recorded the direct withdrawal.
A deposit of $576 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 $84 for an NSF check. The check is returned with the bank statement, and the company will seek payment from the customer.
On October 31, 2015, the bank statement for the checking account of Blockwood Video shows a balance of $12,639, while the company’s records show a balance of $12,376. Information that might be useful in preparing a bank reconciliation is as follows:
Explanation / Answer
1) Bank's error has increased the bank balance so it should be deducted.
2) Company has errornously recoreded $18 more payment so it should be added back
Bank's Cash balance Company's cash balance Per Bank statement 12639 Per general ledger 12376 Outstanding checks -1275 Utility payment 18 Cash Receipts 830 Note payment -659 Bank Error -576 Service fee -33 NSF check -84 Bank Balance per reconcillation 11618 Company Balance per reconcillation 11618Related Questions
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