Bank Reconciliation Prepare a bank reconciliation as of October 31 send the following information:
a. October 31 cash balance in the general ledger is $1688.
b. The October 31 balance Sean thinks statement is $746.
c. Checks issued but not returned with the bank statement where No. 462 for $26 and No. 483 for $100.
d. A deposit made late on October 31 for $900 is included in general ledger balance but not in the bank statement balance.
e. Return with bank statement was a notice that a customers check for $150 that was deposited on October 25 had been returned because the customers Account was overdrawn.
f. During a review of the checks that were returned with the bank statement, it noted that the amount of Check No. 471 was $64 but that in the companys records supporting the general ledger balance, the check had been erroneously recorded as a payment of an account payable in the amount of $46.
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To prepare a bank reconciliation as of October 31, we need to compare the cash balance in the general ledger with the balance on the bank statement and make adjustments for any differences. Here are the steps to follow:
1. Start with the October 31 cash balance in the general ledger, which is $1688 (given in point a).
2. Compare this with the October 31 balance on Sean's bank statement, which is $746 (given in point b).
3. Identify any outstanding checks issued but not yet cleared by the bank. In this case, the checks are No. 462 for $26 and No. 483 for $100 (given in point c). Subtract the total amount of outstanding checks from the general ledger balance.
General ledger balance - Outstanding checks = Adjusted general ledger balance
4. Include any deposits made but not yet reflected on the bank statement. In this case, a $900 deposit made on October 31 is included in the general ledger balance but not in the bank statement balance (given in point d). Add the amount of the deposit to the adjusted general ledger balance.
Adjusted general ledger balance + Deposit not yet on the bank statement = Adjusted general ledger balance
5. Consider any bank charges or items not yet recorded in the general ledger. Since no information is provided regarding this, we assume there are no bank charges.
6. Take into account any returned checks or NSF (non-sufficient funds) notices. In this case, a customer's check for $150 that was deposited on October 25 was returned because the customer's Account was overdrawn (given in point e). Subtract the amount of the returned check from the adjusted general ledger balance.
Adjusted general ledger balance - Amount of the returned check = Adjusted general ledger balance
7. Review checks that were returned with the bank statement. In this case, Check No. 471 was recorded as a payment of an account payable in the general ledger balance, but the amount was not recorded correctly. The actual amount of the check was $64, not $46 (given in point f). Adjust the general ledger balance by the difference between the recorded amount and the actual amount of the check.
Adjusted general ledger balance - (Actual amount - Recorded amount of Check No. 471) = Adjusted general ledger balance
8. Compare the adjusted general ledger balance with the balance on Sean's bank statement. If they are equal, the reconciliation is complete. If not, review the steps to ensure all adjustments and calculations have been made correctly.
By following these steps, you should be able to prepare a bank reconciliation as of October 31.