Question

When the bank reconciliation has differing amounts of the company cash account and the bank statement what must you do

Answer 1

Bank Reconciliation statement used to track difference between cash account as per books and bank statement.
We required to adjusted cash balance by recording transaction of non-sufficient check, service charge, interest revenue on bank account.
Objective of bank Reconciliation statement is to detect any error in books of account or adjusted the timing difference for deposit in transit and outstanding check.
Let’s check example of bank reconciliation statement.

Company name
Bank Reconciliation Statement
May 31, 2017
Balance as per bank statement		4550
Add: Deposit in transit		3550
Deduct: outstanding checks
Check 101	500
Check 103	1610
Check 104	870	-2980
Adjusted cash balance		5120
Balance as per books of account		3190
Add:
Interest earned	50
Notes receivable collected by bank	2500	2550
Deduct:
Collection charges	25
NSF Check	550
Service charges	45	-620
Adjusted cash balance		5120

Company required to record following entry from above bank Reconciliation statement.
Company name
Journal entries
Date	Account title & explanation	Debit	Credit
May 31, 2017	Cash	2500
	Notes receivable		2500
	(To Notes receivable collected by bank.)
May 31, 2017	Cash	50
	Interest revenue		50
	(To record interest revenue.)
May 31, 2017	Collection charges	25
	Cash		25
	(To record Collection charges.)
May 31, 2017	Service charges	45
	Cash		45
	(To record Service charges.)
May 31, 2017	Account receivable	550
	Cash		550
	(To record non-sufficient funds check.)