Bank Reconciliation Problem

Question

The treasurer of a company was preparing a bank reconciliation as of March 31. The following items were identified:

1. The balance per books was $9,600
2. Interest earned on the checking account during March was $10.
3. Outstanding checks totaled $875.
4. A customer’s NSF check in the amount of $40 was returned with the March bank statement.
5. Deposits in transit amounted to $530.
6. During March, the bookkeeper for the company recorded payment of an account payable incorrectly as $136. The check was paid by the bank in the correct amount of $361.
7. The bank incorrectly credited the company’s account $140 for a check deposited by another company.

What is the balance per the bank statement on March 31?

1. 9,550
2. 9,140
3. 10,280
4. 9,830
5. 8,860

Answer 1

So first things first we need to get the starting balances of the company:

1. The balance per books was $9,600

Now we need to look at each piece of information and see how it will affect the book:

1. Interest earned on the checking account during March was $10 (this increases the balance by $10)
2. Outstanding checks totaled $875 (checks we have written but have not been cashed by the recipients so we deduct $875)
3. A customer’s NSF check in the amount of $40 was returned with the March bank statement (a check we thought we received but bounced, deduct $40)
4. Deposits in transit amounted to $530 (money we have received but the bank has not depsited in our account yet, add $530)
5. During March, the bookkeeper for the company recorded payment of an account payable incorrectly as $136. The check was paid by the bank in the correct amount of $361 (the bookkeeper marked a payment as $136 when it should have been $361, deduct $225)
6. The bank incorrectly credited the company’s account $140 for a check deposited by another company (money put in our account that shouldn't have been there, deduct $140)

So now we take out balance and add/ subtract the adjustments:

9600+10-875-40+530-225-140=$8860 (Choice 5)