Ginger Company of Bathurst has a policy of depositing all receipts and making all payments by cheque. On receiving the bank statement, Bill Free, a new bookkeeper, is quite upset that the balance in cash in the ledger is $4,209.50 while the ending bank balance is $4,440.50. Bill is convinced that the bank has made an error. Based on the following facts, is Bill’s concern warranted? What other suggestions could you offer Bill in the bank reconciliation process?
a. The November 30 cash receipts, $611, had been placed in the bank’s night depository after banking hours and consequently did not appear on the bank statement as a deposit.
b. Two debit memoranda and a credit memorandum were included with the returned cheques. None of the memoranda had been recorded at the time of the reconciliation. The first debit memorandum covered a $130 NSF cheque written by Abby Ellen. The second was a $6.50 debit memorandum for service charges. The credit memorandum was for $494 and represented the proceeds less a $6 collection fee from a $500 non- interest-bearing note collected for Ginger Company by the bank.
c. It was also found that cheques No. 942 for $71.50 and No. 947 for $206.50, both written and recorded on November 28, were not among the cancelled cheques returned.
d. Bill found that cheque No. 899 was correctly drawn for $1,094 as payment for a new cash register. However, this cheque had been recorded as though it were for $1,148.
e. The October bank reconciliation showed two cheques outstanding on September 30, No. 621 for $152.50 and No. 630 for $179.30. Cheque No. 630 was paid and returned with the November bank statement but cheque No. 621 was not.