In: Accounting
The following information was available for Anderson Company for the month ended May 31, 2020
Bank Reconciliation | ||
Balance as per bank statement | $ 5,660.22 | |
Add : | ||
Deposit in Transit | $ 5,600.00 | |
$ 11,260.22 | ||
Deduct : | ||
Checks Outstanding | $ 6,310.00 | |
Bank error in recording payment | $ 100.00 | $ 6,410.00 |
Adjusted Bank Balance | $ 4,850.22 | |
Balance as per books | $ 3,890.22 | |
Add : | ||
Collection of Note and Interest | $ 1,110.00 | |
$ 5,000.22 | ||
Deduct : | ||
Bank Charges | $ 50.00 | |
Adjusted Book Balance | $ 4,950.22 |
Deposits in Transit is added to bank balance since deposit will increase the bank balance whereas outstanding checks is decreased from bank balance, since when checks will be cleared bank balance will reduce. The bank incorrectly recorded check payment of $1600 as $1500, i.e. bank balance is reduced by lower amount then what was actually to be reduced, so additionally $100 is reduced from bank balance i.e. $1600-1500
Collection of Note and interest is entered cumulatively, can be entered separately as well. Collection will increase book balance whereas charges will reduce book balance.
$1600-1500