Exercise 6-3  Items on a Bank Reconciliation

Assume that a company is preparing a bank reconciliation for the month of June. It reconciles the bank balance and the book balance to the correct balance. For each of the following items, indicate whether the item is an addition to the bank balance (A-Bank), an addition to the book balance (A-Book), a deduction from the bank balance (D-Bank), a deduction from the book bal- ance (D-Book), or would not appear on the June reconciliation (NA). Also, place a JE next to your answer for any items that will require a journal entry on the company’s books.

              1. Check written in June but not yet returned to the bank for payment

              2. Customer’s NSF check

               3. Customer’s check written in the amount of $54 but recorded on the books in the amount of $45*

              4. Service charge for new checks

 

(Continued )

 

LO1

EXAMPLE 6-1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LO1

 

 

 

 

 

 

 

 

LO2

EXAMPLE  6-2, 6-3

 

 

 

 

 

 

 

326                                                                                               Chapter  6         Cash and Internal Control

 

               5. Principal and interest on a customer’s note collected for the company by the bank

               6. Customer’s check deposited on June 30 but not reflected on the bank statement

               7. Check written on the company’s account, paid by the bank, and returned with the bank statement

               8. Check written on the company’s account for $123 but recorded on the books as

$132*

               9. Interest on the checking account for the month of June

*Answer in terms of the adjustment needed to correct for the error.