The bookkeeper for Sharp Manufacturing Ltd. was trying to determine what items would be used in preparing the company's bank reconciliation that she is completing at May 31, 2018, which was the company's first month of operations. The company's bank statement showed the following:

Sharp's cash receipts summary (which were all deposited) and cheque summary (which were all mailed out to suppliers) for the month of May showed the following:

Instructions
(a) Review Sharp's cash receipts summary and determine the amount of any deposits not recorded by the bank. These will be deposits in transit. Hint: It can be useful to check off or cross out the deposits that appear on both the bank statement and the cash receipts summary because these will not be deposits in transit.
(b) Review Sharp's cheque summary and determine the amount of any cheques that have not yet cleared the company's bank account. These will be outstanding cheques. Hint: It can be useful to check off or cross out the cheques that appear on both the bank statement and the cheque summary because these will not be outstanding cheques.
(c) Review Sharp's bank statement and identify any items on it that are not included in either the company's cash receipts summary or cheque summary. These will be reconciling items to the "Cash balance per books."
(d) Determine the cash balance per books prior to the reconciliation. Hint: This would be equal to: Balance in the cash account at the beginning of the month ? Deposits made during the month - Cheques issued during the month.
(e) Prepare Sharp's bank reconciliation at May 31 and determine the company's reconciled cash balance.

Transcribed Image Text:

SHARP MANUFACTURING LTD Bank Statement May 31 Date Description Amounts Deducted from Account (Debits) Amounts Added to Account (Credits) Balance May Deposit 25,000 25,000 3 Cheque, No. 001 5 Cheque, No. 002 15 Deposit 19 Cheque, No. oo.4 21 Cheque, No. oo6 25 Returned cheque- 23.380 16,250 4,650 20,900 12,611 11,616 10,266 1,620 7,130 8,289 995 1,350 NSF, S. Gillis 25 NSF fee 27 Cheque, No. 009 28 Cheque, No. 010 31 Bank service charges 25 2,125 1,970 40 10,241 8,116 6,146 6,106 Cash Receipts Summary Date May Amount $25,000 4,650 7,820 $37,470 15 Cheque Summary Date Number Amount 001 $ 1,620 3 002 7,130 14 O03 1,675 15 004 8,289 18 005 360 995 22007 2,130 008525 25 009 2,125 010 1,970 $26,819 May 2 006 26