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Financial accounting I – Bank reconciliation statement
BBA | BBA-BI | BBA-TT | BCIS 1st
PU 2012 Fall Q. No. 2a
Spring Company’s deposit all cash receipts intact each day and makes all payment by cheque. On October 31, after all posting was completed; its cash account had a debit balance of Rs. 4,325. The bank statement for the month ended on October 31 showed a balance of Rs. 3,988, other data are:
a. Outstanding checks total Rs. 425.
b. Oct. 31st cash receipt of Rs. 838 was placed in the book night depository and does not appear on the bank’s statement.
c. Bank service charge for October is Rs. 14.
d. Check No. 772 for store supplies on hand was entered at Rs. 405, but paid by the bank at its actual amount of Rs. 315.
Required:
i. Bank Reconciliation Statement. [4]
ii. How much balance to be reported on the Balance Sheet? [1]
iii. Pass the journal entries for the Company’s book. [2]
Solution:
i.
Spring Company
Bank Reconciliation statement
As on October 31
| Particulars | Amount Rs. |
| Balance as per bank statement Add: Deposit in transit Less: Outstanding checks | 3,988 838 425 |
| Adjusted balance as per bank statement | Rs. 4,401 |
| Balance as per company’s book Add: Errors in recording Less: Bank service charge | 4,325 90 14 |
| Adjusted balance as per company’s book | Rs. 4,401 |
ii. Since, the adjusted balance with both bank and company’s statement is Rs. 4,401. Hence, balance Rs. 4,401 is to be reported on the balance sheet of the Spring Company.
iii.
Journal Entries
In the book of Spring Company
October 31
Cash ac/ Dr. Rs. 90
Account receivable a/c Rs. 90
(To record account receivable made by the bank)
October 31
Bank service charges a/c Dr. Rs. 14
Cash a/c Rs. 14
(To record the bank service charge made by the bank)