20 Preparing a bank reconciliation

Hank Brock owns a card shop, Four Aces. The following cash information is available for the month of August 2014.

As of August 31, the bank statement shows a balance of $15,320. The August 31 unadjusted balance in the Cash account of Four Aces is $13,910. A review of the bank statement revealed the following information:

1.	A deposit of $4,295 on August 31, 2014, does not appear on the August bank statement.
2.	It was discovered that a check to pay for baseball cards was correctly written and paid by the bank for $3,650 but was recorded on the books as $4,400.
3.	When checks written during the month were compared with those paid by the bank, three checks amounting to $5,030 were found to be outstanding.
4.	A debit memo for $75 was included in the bank statement for the purchase of a new supply of checks.

Required

Prepare a bank reconciliation at the end of August showing the true cash balance.

FOUR ACES

BANK RECONCILIATION

August 31, 2014

Unadjusted bank balance, August 31, 2014

ADD:

Bank service charges

Debit memo for new checks

Deposit in transit

Error in recording check for inventory

Interest revenue

Outstanding checks

LESS:

Bank service charges

Debit memo for new checks

Deposit in transit

Error in recording check for inventory

Interest revenue

Outstanding checks

TRUE CASH BALANCE, August 31, 2014

Unadjusted bank balance, August 31, 2014

ADD:

Bank service charges

Debit memo for new checks

Deposit in transit

Error in recording check for inventory

Interest revenue

Outstanding checks

LESS:

Bank service charges

Debit memo for new checks

Deposit in transit

Error in recording check for inventory

Interest revenue

Outstanding checks

TRUE CASH BALANCE, August 31, 2014