The bank portion of the bank reconciliation for Christiansen Company at November 30, 2010, is shown here and on the next page.
CHRISTIANSEN COMPANY
Bank Reconciliation
November 30, 2010
Cash balance per bank ..... $ 14,367.90
Add: Deposits in transit ..... 2,530.20
16,898.10

The adjusted cash balance per bank agreed with the cash balance per books at November 30. The December bank statement showed the following checks and deposits.

The cash records per books for December showed the following.

The bank statement contained two memoranda.
1. A credit of $2,645 for the collection of a $2,500 note for Christiansen Company plus interest of $160 and less a collection fee of $15. Christiansen Company has not accrued any interest on the note.
2. A debit of $819.10 for an NSF check written by J. Waller, a customer. At December 31 the check had not been re-deposited in the bank.

At December 31 the cash balance per books was $12,722.30, and the cash balance per bank statement was $19,028.40. The bank did not make any errors, but Christiansen Company made two errors.

Instructions
(a) Using the four steps in the reconciliation procedure described, prepare a bank reconciliation at December 31, 2010.
Step 1. Deposits in transit. Compare the individual deposits on the bank statement with the deposits in transit from the preceding bank reconciliation and with the deposits per company records or copies of duplicate deposit slips. Deposits recorded by the depositor that have not been recorded by the bank represent deposits in transit. Add these deposits to the balance per bank.
Step 2. Outstanding checks. Compare the paid checks shown on the bank statement or the paid checks returned with the bank statement with (a) checks outstanding from the preceding bank reconciliation, and (b) checks issued by the company as recorded in the cash payments journal. Issued checks recorded by the company that have not been paid by the bank represent outstanding checks. Deduct outstanding checks from the balance per the bank.
Step 3. Errors. Note any errors discovered in the previous steps and list them in the appropriate section of the reconciliation schedule. For example, if the company mistakenly recorded as $159 a paid check correctly written for $195, the company would deduct the error of $36 from the balance per books. All errors made by the depositor are reconciling items in determining the adjusted cash balance per books. In contrast, all errors made by the bank are reconciling items in determining the adjusted cash balance per the bank.
Step 4. Bank memoranda. Trace bank memoranda to the depositor€™s records. The company lists in the appropriate section of the reconciliation schedule any unrecorded memoranda. For example, the company would deduct from the balance per books a $5 debit memorandum for bank service charges. Similarly, it would add to the balance per books a $32 credit memorandum for interest earned.

(b) Prepare the adjusting entries based on the reconciliation.

Transcribed Image Text:

Less: Outstanding checks Check Number 3451 3470 3471 3472 3474 Check Amount 2,260.40 1,100.10 844.50 1,426.80 1,050.00 6,681.80 $10,216.30 Adjusted cash balance per bank 0 1525765-2 16746325 523695801 21222221-8 61690 114812223 187 21463-064753 2111123 10256 902 9 127 Cash Receipts Journal Cash Payments Journal Date Number Amount Date Number Amount 12- 3475 $1,640.70 2-20 3482 475.50 12-3 1,211.60 12-2 3476 ,300.00 12-22 3483 Date Amount 12-2 3477 2,130.00 12-23 3484 12-4 3478 12-8 3479 3,080.00 12-30 3486 12-10 3480 12-17 3481 1,140.002-7 2,365.10 764.0012-5 2,672.70 12-20 2,954.00 1,389.5012-25 2,567.30 $14,316.10 2-28 2,836.00 12-30 1,025.00 12-3 ,190.40 Total $16,822.10 538.20 12-24 3485 450.80 600.00 Total 807.40