Question

Bank Reconciliation Statement.

The cash account for Corey’s Construction Company at August 31, 2020, indicated a book balance of $19,885. The bank statement received by the company indicated a balance of $39,473.63 as at August 31, 2020. A comparison of the bank statement and the accompanying cancelled cheques and memos with the records revealed the following:

1. A deposit of $6,794.62 was received by the bank on August 31 after the bank statement was prepared.

2. Cheques #251 for $1,200 and #260 for $1,333.25 were not presented to the bank for encashment as at August 31, 2020.
3. The bank erroneously debited a cheque drawn Corey’s Construction as $16,000 instead of $1,600.

4. The company’s accountant recorded a $3,500.00 cheque for payment of accounts payables as $35,000

5. The bank credited a deposit of $200 as $2,000 to Corey’s Construction account.
6. A cheque for $13,500 from a customer Ali Woods was returned for insufficient funds. The bank charged $50 for Wood’s NSF cheque. The company’s policy states that the bank charges associated with NSF cheques are to be recovered from the customer.
7. A note was collected by the bank of $21,000 on August 31 which included interest of $1,500
8. A debit memo from the bank showed service charge amounting to $2,500 as at August 31, 2020.

1. Prepare Corey’s Construction Company adjusted cash book for August 31^st. 2020.

Answer 1

Corey’s Construction Company
Bank Reconciliation
Aug-31
Bank Statement Balance		39,473.63	Book Balance		19,885
Add:			Add:
Deposit in Transit	6,794.62		Proceeds of note	19,500
			Interest on note	1,500
Bank Error	14,400		Book Error	31,500
Deduct:			Deduct:
			SERVICE CHARGE	2,550
Outstanding Checks(#251)	1,200.00
Outstanding Checks(#260)	1,333.25		NSF Check	13,500
Bank Error	1,800
Adjusted Bank Balance		56,335	Adjusted Book Balance		56,335
Adjusted balance of book	56,335