Question

The cash account of Concord Corporation shows a ledger balance of $3,968.70 on June 30, 2020. The bank statement as at that date shows a balance of $4,128. When the statement was compared with the cash records, the following facts were determined: 1. There were bank service charges for June of $30. 2. A bank memo stated that a note from Bao Dai for $880 and interest of $34 had been collected on June 29, and the bank had made a charge of $6.50 on the collection. (No entry had been made on Concord’s books when Bao Dai’s note was sent to the bank for collection.) 3. Receipts for June 30 of $2,890 were not deposited until July 2. 4. Cheques outstanding on June 30 totalled $2,124.80. 5. On June 29, the bank had charged Concord Corporation’s account for a customer’s NSF cheque amounting to $453.40. 6. A customer’s cheque for $100 had been entered as $60 in the cash receipts journal by Concord Corporation on June 15 as a collection on account. 7. Cheque no. 742 in the amount of $486 had been entered in the cash book as $425, and cheque no. 747 in the amount of $58.60 had been entered as $580. Both cheques were issued to pay for cash purchases of equipment. 8. In May 2020, the bank had charged a $26.50 Cheyenne Corp. cheque against the Concord Corporation account. The June bank statement showed that the bank had reversed this charge and corrected its error.

Prepare a bank reconciliation dated June 30, 2020, proceeding to a correct cash balance. (List items that increase balance as per bank & books first.)

Answer 1

Bank Reconciliation Account of Concord as on June 30, 2020
S No	Particulars	Amount	Amount
	Balance as per Concord Corporation Books		$            3,968.70
	Add:
2A	Note collected from Bao Dai	$ 914.00
4	Cheques Outstanding on June 30	$ 2,124.80
6	Error in recording receipts	$ 40.00
7B	Error in recording payments	$ 521.40
			$            3,600.20
	Less:
1	Bank Service charges of June	$                   30.00
2B	Charges for Collection from Bao Dai	$                     6.50
3	Receipts of June 30 not deposited until July 2	$ 2,890.00
5	Bank Charges for customer's NSF cheque	$ 453.40
7A	Error in recording payments	$                   61.00
			$            3,440.90
	Balance as per Bank Statement		$            4,128.00

Explanation for Adjustments:

(1) Bank Service charges are not recorded in Concord's books. Hence, charges are reduced from bank balance.

(2) Note collected by bank from Bao Dai is not recorded in Concord's books. Hence, the amount received is added to bank balance. Charges are reduced from Bank balance.

(3) Receipts were accounted in books by Concord. However, they were deposited into Bank till July 2. Hence it is reduced from Bank Balance.

(4) Cheques issued were accounted in books by Concord. However, they were outstanding as on June 30. Hence it is added to Bank Balance.

(5) Payment is made by bank on behalf of Concord. Hence, the payment is reduced from Bank Balance.

(6) Receipts have been short recorded in the books of Concord. Hence the difference is added to Bank balance.

(7) Cheques issued have been incorrectly recorded in the books. Necessary adjustments are made to the bank balance.

(8) Error made by bank in May has been rectified in June. It is assumed that no adjustment was made in May in Concord's books and hence, no adjustment is made in June.