Question

Bank Reconciliation The bank reconciliation made by Sandler Company, a sole proprietorship, on March 31 showed:

Deposit in transit of		$1,100
Outstanding checks	no.797	$450
	no.804	$890
The reconciled cash balance on March 31 was		$11,720

The following bank statement is available for April 2012.

Bank Statement
TO		Sandler Company											April 30
		Fairbanks, AK						FAIRBANKS NATIONAL BANK
Date		Deposits		No.		Date		Charges			Date		Balance
Apr.	1	$1,100		804		Apr.	2	$890			Mar.	31	$11,960
	3	1,680		807			3	730			Apr.	1	13,060
	7	1,250		808			7	1,140				2	12,170
	13	1,020		809			7	838				3	13,120
	18	840		810			16	1,040				7	12,392
	23	790		811			13	326				13	13,086
	27	1,340		813			27	540				16	12,046
	30	1,160		814			23	600				18	12,386
	30 IN	60		NSF			18	500				23	12,576
				SC			30	40				27	13,376
												30	14,556
Item codes		EC: Error Correction				DM: Debit Memo					CM: Credit Memo
		SC: Service Charge				OD: Overdraft					RT: Returned Item
		IN: Interest Earned				NSF: Non-sufficient Funds

A list of deposits made and checks written during April is shown below:

Deposits Made				Checks Written
Apr.	2	$1,680		No.	807	$730
	6	1,250			808	1,140
	10	1,020			809	838
	17	840			810	1,040
	22	790			811	272
	24	1,340			812	948
	29	1,160			813	540
	30	1,425			814	600
		$9,505			815	372
					816	875
						$7,355

The Cash in Bank account balance on April 30 was $13,870. In reviewing checks returned by the bank, the accountant discovered that check No. 811 written for $326 for delivery expense, was recorded in the cash disbursements journal as $272. The NSF check for $500 was that of customer R. Koppa, deposited in April.

Required
a. Prepare a bank reconciliation for Sandler Company at April 30.
b. Prepare the necessary journal entries to bring the Cash in Bank account into agreement with the reconciled cash balance on the bank reconciliation.

• Bank reconciliation
• Journal entries

SANDLER COMPANY Bank Reconciliation April 30
Ending Balance from Bank StatementBalance from General LedgerAdd: Deposits not credited by bankAdd: Interest EarnedService chargeReconciled Cash Balance				Ending Balance from Bank StatementBalance from General LedgerAdd: Deposits not credited by bankAdd: Interest EarnedService chargeReconciled Cash Balance
Ending Balance from Bank StatementBalance from General LedgerAdd: Deposits not credited by bankAdd: Interest EarnedService chargeReconciled Cash Balance				Ending Balance from Bank StatementBalance from General LedgerAdd: Deposits not credited by bankAdd: Interest EarnedService chargeReconciled Cash Balance
Less: Outstanding checks (list in numerical order)				Less: NSF Check R. Koppa
	Check no.	Amount
				Ending Balance from Bank StatementBalance from General LedgerAdd: Deposits not credited by bankAdd: Interest EarnedService chargeReconciled Cash Balance
				Error in recording
				Check No. 811
Ending Balance from Bank StatementBalance from General LedgerAdd: Deposits not credited by bankAdd: Interest EarnedService chargeReconciled Cash Balance

Answer 1

a]	BANK RECONCILIATION STATEMENT
	Balance per ledger		$ 13,870	Balance per bank statement		$        14,556
	Add:			Add:
	Interest income	$                      60	$                    60	Deposits in transit	$           1,425	$          1,425
			$            13,930			$        15,981
	Less:			Less:
	Mistake in check 811 [326-272]	$                      54		Check outstanding [450+372+875+948]	$           2,645	$          2,645
	NSF check	$    500
	Service charges	$                      40	$                  594
	Adjusted book balance		$            13,336	Adjusted bank balance		$        13,336
b]	Cash	$                      60
	Interest income		$                    60
	[To record interest income credited by bank]
	Delivery expense	$                      54
	Cash		$                    54
	[To correct mistake in check #811]
	Accounts receivable-R Koppa	$    500
	Bank service charges	$                      40
	Cash		$                  540
	[To record NSF check and charges of bank]