Bank Reconciliation
Copyright © 2006 John Wiley & Sons, Inc.
Balances Should Agree
Weygandt/Financial Accounting 5e
$ XXX
XX
Less:Charges recorded by bank but not by business (e.g., service charges, NSF checks) Adjusted cash balance per books
XX
$ XXX
Cash balance per books Add: Deposits recorded by bank but not by business (e.g., note collection, interest)
$ XXX
XX
XX
$ XXX
Adjusted cash balance per bank
Less:Charges recorded by business but not by bank (e.g., outstanding checks)
Add: Deposits recorded by business but not by bank (e.g., deposits in transit)
Cash balance per bank statement
Bank Reconciliation (Date)
Prepare Adjusting Entries To Correct Books
Differences Caused By 1. Time lags 2. Errors
ILLUSTRATION 8-5 BANK RECONCILIATION FORMAT
56
ILLUSTRATION 8-6 PREPARING THE BANK RECONCILIATION Bank Statement
Books
Bank balance June 1 . . . . $10,000
Book balance June 1 . . . . $10,150
Deposits and credits
Cash Receipts
June 1 June 10 June 20 June 25 June 28
200.00 350.00 425.00 750.00 CM 320.00
Checks and debits
10.00 25.00 52.00 199.00 205.00 650.00 200.00 125.00 250.00 125.00 6.00
#209 #210 #211 #213 #216 #217 #218 #219 #220 NSF S.C.
Cash Disbursements
June 10 $ 350.00 June 20 425.00 June 28 320.00 June 30 275.00 Total $1,370.00
Total credits $2,045.00 Total debits $1,847.00 Bank balance June 30 . . . . . $10,198
$
25.00 52.00 22.00 199.00 void 29.00 205.00 560.00 200.00 125.00 250.00 60.00 126.00 82.00 $1,935.00
#210 #211 #212 #213 #214 #215 #216 #217 #218 #219 #220 #221 #222 #223 Total
Bank balance June 30 . . . . . $9,585
CM—Represents $725 Note Receivable collection plus interest revenue of $50 less bank charges of $25. NSF represents $125 check from ABC Company deposited on 6/20.
HINT: One error was made in recording disbursements.
May Bank Reconciliation Balance per bank statement Add:
$10,000 200 10,200
Deposits in transit
Less: Outstanding checks #201 #209 Adjusted balance per bank
$40 10
50 $10,150
Procedures for Finding Differences between Bank and Book Balances: 1. Examine last month's bank reconciliation and list items that have not changed, i.e., outstanding checks from prior month which have not cleared (again) or other reconciling items which were not corrected (bank service charges). 2. Compare all recorded disbursements per books to bank debits (charges) and list differences. 3. Compare all recorded receipts per books to bank credits and list differences. 4. Prepare bank reconciliation from data collected.
Copyright © 2006 John Wiley & Sons, Inc.
Weygandt/Financial Accounting 5e
57
ILLUSTRATION 8-6 (Continued) PREPARING THE BANK RECONCILIATION June Bank Reconciliation Balance per bank Add: Deposit in Transit: June 30 Less: Outstanding checks #201 $ 40 #212 22 #215 29 #221 60 #222 126 #223 82 Adjusted balance per bank Balance per books Add: Bank collection of N/R
$10,198 275 10,473
359 $10,114 $9,585 750 $10,335
Less: NSF (ABC Co.) $125 Bank service charge 6 Error: Check #217 90 Adjusted balance per book
Prepare adjusting entries to adjust cash balance per books to adjusted balance per book
221 $10,114
Bank Reconciliation Adjusting Entries Bank collects a $725 Notes Receivable and $50 Interest Revenue less $25 for bank charges (net $750). 750 Cash 25 Miscellaneous Expense Interest Revenue 50 Notes Receivable 725 Book error of $90 resulted from recording check No. 217 as $560 when actual check amount and invoice amounted to $650 (XYZ Company—Accounts Payable). 90
Accounts Payable—XYZ Company Cash
90
Bank service charges of $6. 6
Miscellaneous Expense Cash
6
NSF check for $125 from ABC Company returned by bank. Accounts Receivable—ABC Company Cash Copyright © 2006 John Wiley & Sons, Inc.
125
Weygandt/Financial Accounting 5e
125
58
F08_12
Page 1 of 1
Weygandt Financial Accounting 5e / F08_12 Chapter 8 - Internal Control and Cash Image Gallery
F08_12.jpg
file://H:\UC Davis Extension Accounting Program\UC Davis Extension Documents\Fall 2...
11/2/2006
Dan's Guitar Shop Petty Cash Reimbursement Detail For The Month of __________________ Item
Description
GL Code
1
Purchases (Direct Materials)
5010
2
Office Supplies
6460
3
Supplies
6660
4
Small Equipment (
Balances Should Agree
Weygandt/Financial Accounting 5e
$ XXX
XX
Less:Charges recorded by bank but not by business (e.g., service charges, NSF checks) Adjusted cash balance per books
XX
$ XXX
Cash balance per books Add: Deposits recorded by bank but not by business (e.g., note collection, interest)
$ XXX
XX
XX
$ XXX
Adjusted cash balance per bank
Less:Charges recorded by business but not by bank (e.g., outstanding checks)
Add: Deposits recorded by business but not by bank (e.g., deposits in transit)
Cash balance per bank statement
Bank Reconciliation (Date)
Prepare Adjusting Entries To Correct Books
Differences Caused By 1. Time lags 2. Errors
ILLUSTRATION 8-5 BANK RECONCILIATION FORMAT
56
ILLUSTRATION 8-6 PREPARING THE BANK RECONCILIATION Bank Statement
Books
Bank balance June 1 . . . . $10,000
Book balance June 1 . . . . $10,150
Deposits and credits
Cash Receipts
June 1 June 10 June 20 June 25 June 28
200.00 350.00 425.00 750.00 CM 320.00
Checks and debits
10.00 25.00 52.00 199.00 205.00 650.00 200.00 125.00 250.00 125.00 6.00
#209 #210 #211 #213 #216 #217 #218 #219 #220 NSF S.C.
Cash Disbursements
June 10 $ 350.00 June 20 425.00 June 28 320.00 June 30 275.00 Total $1,370.00
Total credits $2,045.00 Total debits $1,847.00 Bank balance June 30 . . . . . $10,198
$
25.00 52.00 22.00 199.00 void 29.00 205.00 560.00 200.00 125.00 250.00 60.00 126.00 82.00 $1,935.00
#210 #211 #212 #213 #214 #215 #216 #217 #218 #219 #220 #221 #222 #223 Total
Bank balance June 30 . . . . . $9,585
CM—Represents $725 Note Receivable collection plus interest revenue of $50 less bank charges of $25. NSF represents $125 check from ABC Company deposited on 6/20.
HINT: One error was made in recording disbursements.
May Bank Reconciliation Balance per bank statement Add:
$10,000 200 10,200
Deposits in transit
Less: Outstanding checks #201 #209 Adjusted balance per bank
$40 10
50 $10,150
Procedures for Finding Differences between Bank and Book Balances: 1. Examine last month's bank reconciliation and list items that have not changed, i.e., outstanding checks from prior month which have not cleared (again) or other reconciling items which were not corrected (bank service charges). 2. Compare all recorded disbursements per books to bank debits (charges) and list differences. 3. Compare all recorded receipts per books to bank credits and list differences. 4. Prepare bank reconciliation from data collected.
Copyright © 2006 John Wiley & Sons, Inc.
Weygandt/Financial Accounting 5e
57
ILLUSTRATION 8-6 (Continued) PREPARING THE BANK RECONCILIATION June Bank Reconciliation Balance per bank Add: Deposit in Transit: June 30 Less: Outstanding checks #201 $ 40 #212 22 #215 29 #221 60 #222 126 #223 82 Adjusted balance per bank Balance per books Add: Bank collection of N/R
$10,198 275 10,473
359 $10,114 $9,585 750 $10,335
Less: NSF (ABC Co.) $125 Bank service charge 6 Error: Check #217 90 Adjusted balance per book
Prepare adjusting entries to adjust cash balance per books to adjusted balance per book
221 $10,114
Bank Reconciliation Adjusting Entries Bank collects a $725 Notes Receivable and $50 Interest Revenue less $25 for bank charges (net $750). 750 Cash 25 Miscellaneous Expense Interest Revenue 50 Notes Receivable 725 Book error of $90 resulted from recording check No. 217 as $560 when actual check amount and invoice amounted to $650 (XYZ Company—Accounts Payable). 90
Accounts Payable—XYZ Company Cash
90
Bank service charges of $6. 6
Miscellaneous Expense Cash
6
NSF check for $125 from ABC Company returned by bank. Accounts Receivable—ABC Company Cash Copyright © 2006 John Wiley & Sons, Inc.
125
Weygandt/Financial Accounting 5e
125
58
F08_12
Page 1 of 1
Weygandt Financial Accounting 5e / F08_12 Chapter 8 - Internal Control and Cash Image Gallery
F08_12.jpg
file://H:\UC Davis Extension Accounting Program\UC Davis Extension Documents\Fall 2...
11/2/2006
Dan's Guitar Shop Petty Cash Reimbursement Detail For The Month of __________________ Item
Description
GL Code
1
Purchases (Direct Materials)
5010
2
Office Supplies
6460
3
Supplies
6660
4
Small Equipment (
