Blairsville Corp. prepares monthly bank reconciliations of its checking account

Question

Blairsville Corp. prepares monthly bank reconciliations of its checking account balance. The bank statement for July 2016 indicated the following:

An analysis of canceled checks and deposits and the records of Blairsville revealed the following items:

The correct amount of check #205 is $540, but it was recorded as a cash disbursement of $450. The check was issued to pay for merchandise purchases. The check appeared on the bank statement correctly.

a. Prepare a bank reconciliation at July 31, 2016, in proper form.

b. What amount would Blairsville report on its balance sheet at July 31, 2016, for cash?$

Balance, July 31, 2016 $63,400 Service charge for July 160 Interest earned during July 100 NSF check from Black Corp. (deposited by Blairsville) 1,150 Note ($3,000) and interest ($80) collected for Blairsville from a customer of Blairsville’s 3,080

Explanation / Answer

Bank reconciliation:

b

Blaisville reports 60,550 in its balance sheet

Particulars Amount Amount Bank balance          63,400 Add deposit in transit            1,780 Less outstanding checks -4630 Adjusted balance          60,550

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