•The Bank Account as a control device that helps to protect cash. One of the requirements is to conduct periodic bank statement reconciliations. Using the following data, complete a bank statement reconciliation or EEE Electric for the month of September. The Bank statement indicated bank service charges of $63. Outstanding checks as of September 30 amounted to $1,405. Deposits in transit as of September 30 amounted to $2,769. The ending balance per the September bank Statement is $40,653. Then: EEE bookkeeper mistakenly recorded a $1,610 cash disbursement as $1,160 for Office Supplies on check#2402. The bank mistakenly recorded a deposit of $2,800 as $280 on February 17. The bank made an EFT payment on behalf of the company for Insurance for $3,200. The bank collected rent of $3,000 and a note, for $16,450, including interest of $450. The ending cash balance per the books for September before any adjustments was $28,800.
To complete the bank statement reconciliation for EEE Electric for the month of September, we will need to compare the bank statement with EEE Electric's cash records and make the necessary adjustments.
Here are the steps to reconcile the bank statement:
1. Start with the ending balance per the September bank statement, which is $40,653.
2. Add any deposits in transit that have not yet been recorded on the bank statement. In this case, the deposits in transit amount to $2,769.
Ending balance per bank statement + Deposits in transit = $40,653 + $2,769 = $43,422.
3. Deduct any outstanding checks that have not yet cleared the bank. In this case, the outstanding checks amount to $1,405.
Ending balance per bank statement + Deposits in transit - Outstanding checks = $43,422 - $1,405 = $42,017.
4. Compare the adjusted ending balance per the bank statement with the ending cash balance per the books. In this case, the ending cash balance per the books for September before any adjustments was $28,800.
Adjusted ending balance per bank statement - Ending cash balance per books = $42,017 - $28,800 = $13,217.
So, there is a difference of $13,217 between the bank statement and the books.
Now, let's analyze the specific transactions and adjustments:
5. The bank statement shows bank service charges of $63. This amount needs to be deducted from the adjusted ending balance per the bank statement.
Adjusted ending balance per bank statement - Bank service charges = $13,217 - $63 = $13,154.
6. The EEE bookkeeper mistakenly recorded a $1,610 cash disbursement as $1,160 for Office Supplies on check#2402. This entry needs to be corrected.
Adjusted ending balance per bank statement - Amount of the incorrect entry = $13,154 - $1,610 = $11,544.
7. The bank mistakenly recorded a deposit of $2,800 as $280 on February 17. This error needs to be corrected.
Adjusted ending balance per bank statement + Amount of the bank error = $11,544 + ($2,800 - $280) = $14,064.
8. The bank made an EFT payment on behalf of the company for Insurance of $3,200. This amount needs to be deducted from the adjusted ending balance per the bank statement.
Adjusted ending balance per bank statement - EFT payment = $14,064 - $3,200 = $10,864.
9. The bank collected rent of $3,000 and a note, including interest, for $16,450. This amount needs to be added to the adjusted ending balance per the bank statement.
Adjusted ending balance per bank statement + Amount of rent and note collected = $10,864 + $16,450 = $27,314.
Finally, compare the adjusted ending balance per the bank statement with the ending cash balance per the books:
Adjusted ending balance per bank statement = $27,314
Ending cash balance per books = $28,800
There is still a difference of $1,486 between the adjusted ending balance per the bank statement and the ending cash balance per the books. Further investigation may be required to identify and resolve this difference.
This reconciliation process helps ensure that the cash records of EEE Electric are accurate and complete, and it allows for the identification and correction of any errors or discrepancies in the bank statement.
To complete the bank statement reconciliation for EEE Electric for the month of September, follow these steps:
Step 1: Start with the ending balance per the September bank statement
The ending balance per the September bank statement is $40,653.
Step 2: Add or subtract any outstanding checks
The outstanding checks as of September 30 amounted to $1,405. Subtract this amount from the ending balance.
$40,653 - $1,405 = $39,248
Step 3: Add or subtract any deposits in transit
The deposits in transit as of September 30 amounted to $2,769. Add this amount to the adjusted balance.
$39,248 + $2,769 = $41,017
Step 4: Consider any bank service charges
The bank statement indicated bank service charges of $63. Subtract this amount from the adjusted balance.
$41,017 - $63 = $40,954
Step 5: Compare the adjusted balance to the ending cash balance per the books
The ending cash balance per the books for September before any adjustments was $28,800. This means there is a difference of $12,154 ($40,954 - $28,800) between the adjusted bank balance and the book balance.
Step 6: Investigate and resolve any discrepancies
To address the discrepancies, consider the following:
- The bookkeeper mistakenly recorded a $1,610 cash disbursement as $1,160 for Office Supplies on check#2402. This means the check was understated by $450 ($1,610 - $1,160). Deduct this amount from the adjusted bank balance.
$40,954 - $450 = $40,504
- The bank mistakenly recorded a deposit of $2,800 as $280 on February 17. This means the deposit was understated by $2,520 ($2,800 - $280). Add this amount to the adjusted bank balance.
$40,504 + $2,520 = $43,024
- The bank made an EFT payment on behalf of the company for Insurance for $3,200. Deduct this amount from the adjusted bank balance.
$43,024 - $3,200 = $39,824
- The bank collected rent of $3,000 and a note, including interest, for $16,450. Add the total amount collected ($3,000 + $16,450) to the adjusted bank balance.
$39,824 + $19,450 = $59,274
Step 7: Compare the final adjusted balance to the ending cash balance per the books
The final adjusted bank balance is $59,274. Compare this to the ending cash balance per the books.
If the adjusted bank balance matches the ending cash balance per the books, the bank statement reconciliation is complete. Otherwise, further investigation may be required to identify any additional discrepancies.