Question

Blairsville Corp. prepares monthly bank reconciliations of its checking account balance. The bank statement for July 2016 indicated the following:

Balance, July 31, 2016	$63,400
Service charge for July	160
Interest earned during July	100
NSF check from Black Corp. (deposited by Blairsville)	1,150
Note ($3,000) and interest ($80) collected for Blairsville from a customer of Blairsville’s	3,080

An analysis of canceled checks and deposits and the records of Blairsville revealed the following items:

Checking account balance per Blairsville’s books	$58,770
Outstanding checks as of July 31	4,630
Deposit in transit at July 31	1,780
Error in recording check #205 issued by Blairsville	90

The correct amount of check #205 is $540, but it was recorded as a cash disbursement of $450. The check was issued to pay for merchandise purchases. The check appeared on the bank statement correctly.

a. Prepare a bank reconciliation at July 31, 2016, in proper form.

b. What amount would Blairsville report on its balance sheet at July 31, 2016, for cash?$

Answer 1

Bank reconciliation:

Particulars	Amount	Amount
Bank balance		63,400
Add deposit in transit		1,780
Less outstanding checks		-4630
Adjusted balance		60,550

Particulars	Amount	Amount
Book balance		58,770
Add:
Interest	100
Note collection	3,080	3,180
Less:
Service charge	160
NSF check	1,150
Error	90	-1,400
Adjusted balance		60,550

b

Blaisville reports 60,550 in its balance sheet