The following June 30 bank reconciliation was prepared for Poway Co.a. Identify the errors in the following bank reconciliation:

The following June 30 bank reconciliation was prepared for Poway Co.

Poway Co. Bank Reconciliation For the Month Ended June 30 Cash balance according to bank statement . . . . . . . . . . . . . . . . . . . . . . . . . . $16,185 Add outstanding checks: No. 1067. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $  575 1106. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 470 1110. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,050 1113. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      910      3,005 $19,190 Deduct deposit of June 30, not recorded by bank . . . . . . . . . . . . . . . . . . . . 6,600 Adjusted balance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $12,590 Cash balance according to company’s records . . . . . . . . . . . . . . . . . . . . . . . $ 8,985 Add: Proceeds of note collected by bank: Principal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $6,000 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      300 $6,300 Service charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        15      6,315 $15,300 Deduct: Check returned because of insufficient funds . . . . . . . . . . . . . . . . $   890 Error in recording June 17 deposit of $7,150 as $1,750 . . . . . . .  5,400 6,290 Adjusted balance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 9,010

a. Identify the errors in the following bank reconciliation:

b. Prepare a new bank reconciliation for Poway Co., using the format shown in the illustrative problem.

Answer:

a. 

1. The heading should be “June 30,” and not “For the Month Ended June 30.”

2. The outstanding checks should be deducted from the balance per bank.

3. The deposit of June 30, not recorded by the bank, should be added to the balance per bank.

4. Service charges should be deducted from the balance per company’s records.

5. The error in recording the June 17 deposit of $7,150 as $1,750 should be added to the balance per company’s records.

6. The adjusted balances ($12,590 and $9,010) are not equal.

b. A correct bank reconciliation would be as follows: Cash balance according to bank statement$16,185 Add deposit of June 30, not recorded by bank6,600 Deduct outstanding checks: No. 1067$ 575 1106470 11101,050 1113910 3,005 Adjusted balance$19,780 Cash balance according to company’s records$ 8,985 Add: Note and interest collected by bank $6,300 Error in recording June 17 deposit as $1,750 instead of $7,1505,400 11,700 Deduct: Check returned because of insufficient funds $ 890 Service charges15 905 Adjusted balance$19,780

An accounting clerk for Chesner Co. prepared the following bank reconciliation:From the data in this bank reconciliation

An accounting clerk for Chesner Co. prepared the following bank reconciliation:

Chesner Co. Bank Reconciliation August 31 Cash balance according to company’s records . . . . . . . . . . . . . . . . . . . . . . . $11,100 Add: Outstanding checks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,585

Error by Chesner Co. in recording Check No. 1056 as $950 instead of $590 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 360 Note for $12,000 collected by bank, including interest . . . . . . . . . .   12,480   16,425 $27,525 Deduct: Deposit in transit on August 31. . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 7,200 Bank service charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           25 7,225 Cash balance according to bank statement . . . . . . . . . . . . . . . . . . . . . . . . . . $20,300

a. From the data in this bank reconciliation, prepare a new bank reconciliation for Chesner Co., using the format shown in the illustrative problem.

b. If a balance sheet is prepared for Chesner Co. on August 31, what amount should be reported for cash?

Answer:

a. Cash balance according to bank statement$20,300 Add deposit in transit on August 317,200 Deduct outstanding checks3,585 Adjusted balance$23,915 Cash balance according to company’s records$11,100 Add: Error in recording Check No. 1056 as $950 instead of $590$ 360 Note for $12,000 collected by bank, including interest12,480 12,840 Deduct bank service charges25 Adjusted balance$23,915 b.$23,915