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Option #1: Conducting a Bank Reconciliation

Note: Part 1 is the bank reconciliation itself and Part 2 is for the adjusting entries.

Instructions: Using the information below, complete the bank reconciliation for both the "book" and

the "bank" sides and create all necessary adjusting journal entries.

Details:

  • Cash balance per company's records as of July 31st, 2011 was $66,955.
  • Bank statement balance as of July 31st, 2011 was $15,875.
  • A deposit in the amount of $52,000 was deposited into the night depository of the bank on July 31st but did not get recorded in the July 31st bank statement balance.
  • Check #354 in the amount of $575 and check # 365 in the amount of $1,500 were outstanding as of this bank statement.
  • An NSF check in the amount of $500 (written by J. Smith, a customer) was returned by the bank to the company in the July 31st bank statement.
  • A bank service charge in the amount of $50 was included in the July 31st bank statement.
  • Interest in the amount of $125 was deposited into our account by the bank.
  • The bank collected $1,000 from a customer (H. Doe) on our behalf as part of the lockbox service that we established with the bank.
  • The bank erroneously posted another company's check (i.e. withdrawal) in the amount of $5,000 to our account.
  • The bank erroneously posted another company's deposit into our account in the amount of $3,000.
  • After reconciling the bank statement, we noticed that a check that was written to pay for the current month's utilities in the amount of $250 was improperly recorded in our books as $520. (It was properly recorded in the bank statement as $250.)
Answer
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