Question

Corbin Catering prepares monthly bank reconciliations of its checking account balance. The bank statement received by Corbin Catering for February 20X9 follows:,Corbin Catering, First Fifth Bank,54 Windsong Drive ,POBox 22,

BANK STATEMENT ,DATEOF STATEMENT:

February 28, 20X9,,Balance,February 1, 2009,$29,500,Interestearned ,$100,Servicecharge,$40,Accountcollected on behalf of Corbin ,1,600,Checks:,#310 ,120,#312,260,#313 ,180,#314 ,215,#316 ,80,#317 ,110,Deposits:,February 15, 20X9 ,5,000,Ending Balance ,$35,195,Corbin Catering’s books disclosed the following additional information:,

Checking account balance, February 1, 20X9 ,$29,500,Checkswritten:,#310 ,$120,#311 ,40,#312 ,260,#313 ,180,#314,215,#315 ,200,#316 ,80,#317 ,110,Deposits:,February15, 20X9,$5,000,February28, 20X9,2,500,Endingbalance ,$35,795,:,

a)Prepare a bank reconciliation for Corbin Catering at February 28, 20X9

b) when and why are adjustments made to the books after reconciliation of the bank account. Pass necessary journal entries Corbin Catering

Answer 1

Bank Reconciliation:

Bank Reconciliation is a statement which reconciles the depositor's cash balance in cash book with depositor's cash balance in bank account or pass book.

a) Bank Reconciliation for Corbin Catering as on February 28, 20X9 :

Balance as per Bank statement Feb 28,20x9 $35195

Add : Deposit in transit 2500

Deduct: Ouststanding cheques #311 40

#315  200 (240)

Adjusted/Corrected Balance as per Bank $37455

Balance as per Books on Feb 28, 20X9 $35795

Add :

Interest earned 100

Accounts Collected by bank 1600 1700

Deduct : Service charge charged    (40)

Adjusted/Corrected balance as per Books $37455

b) Adjustments to be made in Books

Unless there are any bank errors we need not do any adjustments to the Bank balance. On the other side, inorder to rectify our Book balance we have to pass journal entries for each reconciling items.

These are the items or transactions that appear on the bank statements but not included in Corbin Catering's general ledger accounts.Therefore we need to make necessary adjustments by passing journal entries in the general ledger.

Journal entries to be passed in the Books of Corbin Catering:

Date	Journal entry	Debit	Credit
28-02-20X9	Bank service charge Exp Dr To Cash For service chargcharges chargecharged bby the bank.	40	40
28-02-20X9	Cash Dr To Interest Earned For the interest earned on the outstanding balance of bank account.	100	100
28-02-20X9	Cash Dr To Accounts Collected by Bank For the accounts collected by bank on behalf of Corbin Catering.	1600	1600