Bank Reconciliation

The only way to do it in practice is to book to correct and then bank amount to correct, only then can you prove cash balance to be correct.

Lets prepare a May 31st bank reconciliation for the Hawthorne Company.

• The May 31 bank statement indicated a balance of $34,680.
• The cash general ledger account on that date shows a balance of $35,276
• Cash receipts not yet deposited on May 31 totaled $2,965.
• A $1,020 check mailed to the bank for deposit had not reached the bank at the statement date.
• Outstanding checks totaled $5,536.
• A check written to pay for raw materials purchased on account cleared the bank for $1,790 but was erroneously recorded at $790.
• The bank statement showed $80 in service charges in May.
• The bank returned NSF checks in the amount of $2,167 received as payment on accounts receivable. The charge for this was $20
• The bank collected a note receivable for $1,120 that included $120 of interest.