Need to prepare the bank reconciliation for Multi-Plex Health care at May31 and Record the entries called for by the reconciliation.
The May 31 bank statement of Multi-Plex Health care has just arrived from first state bank.To prepare the bank reconciliation gather the following data:
1.The May31 bank balance is $12,209, 2.The bank statement includes two charges for NSF checks from customers.One is $67 and the other for $195, 3.The following Multi-Plex checks are outstanding at May 31:
Check No Amount
616 $405
802 74
806 36
809 161
810 229
811 48
4.Multi-Plex collects from a few customerrs by EFT.The may bank statement lists a $200 deposit for a collection on account,5.The bank statement includes two special deposits that Multi-Plex hasn't recorded yet:$900,for dividend revenue, and $16, the interest revenue Multi-Plex earned on its bank balance during May,6.The bank statement lists a $7 subtraction for the bank statement,7.On may 31 the Multi-Plex treasurer deposited $381, but this does not appear on the bank statement,8.The bank statement includes a $410 deduction for a check drawn by Multi-State Frieght Company.Multi-Plex notified the bank of this error,9.Mult-Plex's cash account shows a balance of $11,200 on May31
To prepare the bank reconciliation for Multi-Plex Health Care at May 31, follow these steps:
Step 1: Start with the May 31 bank balance of $12,209. This is the balance reported on the bank statement.
Step 2: Identify any NSF (Non-Sufficient Funds) charges from customers. In this case, there are two charges: $67 and $195. Deduct the total amount of NSF charges ($262) from the May 31 bank balance.
Bank Balance after NSF charges: $12,209 - $262 = $11,947
Step 3: Identify the outstanding checks. These are the Multi-Plex checks that have been issued but have not yet cleared the bank. The outstanding checks at May 31 are:
- Check No. 616 for $405
- Check No. 802 for $74
- Check No. 806 for $36
- Check No. 809 for $161
- Check No. 810 for $229
- Check No. 811 for $48
Deduct the total amount of outstanding checks ($953) from the bank balance after NSF charges.
Bank Balance after Outstanding Checks: $11,947 - $953 = $10,994
Step 4: Consider any deposits in transit. These are deposits made by Multi-Plex but have not yet been recorded by the bank. In this case, there is only one deposit:
- Deposit of $381 made by Multi-Plex on May 31
Add the deposit in transit ($381) to the bank balance.
Bank Balance after Deposits in Transit: $10,994 + $381 = $11,375
Step 5: Account for any bank errors or adjustments. In this case, Multi-Plex notified the bank of an error regarding a deduction of $410 for a check drawn by Multi-State Freight Company. This error should be added back to the bank balance.
Bank Balance after Adjustments: $11,375 + $410 = $11,785
Step 6: Compare the adjusted bank balance with the cash account balance shown on Multi-Plex's records. The cash account balance on May 31 is given as $11,200.
Step 7: Calculate the difference between the adjusted bank balance and the cash account balance:
Difference = Adjusted Bank Balance - Cash Account Balance
Difference = $11,785 - $11,200 = $585
Step 8: Record the entries called for by the reconciliation:
a) Deduct NSF Charges:
- Debit Accounts Receivable
- Credit Cash
b) Add Deposits in Transit:
- Debit Cash
- Credit Accounts Receivable
c) Add Bank Errors/Adjustments:
- Debit Cash
- Credit Bank Error/Adjustment Account
These entries will help reflect the correct balances in the respective accounts based on the reconciliation adjustments.
By following these steps and recording the necessary entries, you can prepare the bank reconciliation for Multi-Plex Health Care at May 31 and reconcile the differences between the bank statement and the company's cash account.