Florence Company received a bank statement showing a balance of $13,550 on November 30, 2019. During the bank reconciliation process, Florence’s accountant noted the following bank errors:
A check for $265 issued by Florentine, Inc., was mistakenly charged to Florence Company’s account.
Check 2782 was written for $200 but was paid by the bank as $1,200.
Check 2920 for $85 was paid by the bank twice.
A deposit for $580 on November 22 was credited by the bank for $850.
Assuming outstanding checks total $2,450, prepare the adjusted bank balance section of the November 30, 2019, bank reconciliation.
Adjusted Bank Balance:
Balance per bank statement: $13,550
Add:
Deposit in transit: $580
Correction of bank error: $265
Total Adjusted Bank Balance: $14,395
Adjusted Book Balance:
Balance per book: Unknown
Less:
Outstanding checks: $2,450
Correction of check error: $1,000
Correction of bank error (double payment): $85
Total Adjusted Book Balance: Unknown
To complete the bank reconciliation, we need to determine the adjusted book balance. We know that the outstanding checks total $2,450 and that there was a correction for a check error of $1,000. Therefore, the total of the outstanding checks and the check error correction is $3,450. To find the adjusted book balance, we need to subtract this amount from the adjusted bank balance:
Adjusted Book Balance = Adjusted Bank Balance - (Outstanding checks + Check error correction)
Adjusted Book Balance = $14,395 - ($2,450 + $1,000)
Adjusted Book Balance = $10,945
Therefore, the adjusted book balance is $10,945.
To prepare the adjusted bank balance section of the bank reconciliation, we need to take into account the bank errors and the outstanding checks. Let's start by calculating the adjusted bank balance:
1. Begin with the bank statement balance: $13,550
2. Add any deposits in transit:
- No information is given about outstanding deposits, so we leave this as $0.
3. Subtract outstanding checks:
- The outstanding checks total $2,450.
- Subtract $2,450 from the previous balance:
$13,550 - $2,450 = $11,100
4. Add or subtract any bank errors:
- Mistakenly charged check: Add $265
$11,100 + $265 = $11,365
- Check paid by bank as $1,200: Subtract $1,000 ($1,200 - $200)
$11,365 - $1,000 = $10,365
- Duplicate payment: Subtract $85
$10,365 - $85 = $10,280
- Deposit credited incorrectly: Add $270 ($850 - $580)
$10,280 + $270 = $10,550
Therefore, the adjusted bank balance section of the November 30, 2019, bank reconciliation is $10,550.