Bank Reconciliation and Entries
The cash account for Deaver Consulting at October 31, 20Y6, indicated a balance of $11,810. The bank statement indicated a balance of $15,100 on October 31, 20Y6. Comparing the bank statement and the accompanying canceled checks and memos with the records revealed the following reconciling items:
a. Checks outstanding totaled $5,440.
b. A deposit of $5,660, representing receipts from October 31, had been made too late to appear on the bank statement.
c. The bank had collected $2,940 on a note left for collection. The face of the note was $2,790.
d. A check for $770 returned with the statement had been incorrectly recorded by Deaver Consulting as $700. The check was for the payment of an obligation to Oxford Office Supplies Co. for the purchase of office supplies on account.
e. A check drawn for $740 had been incorrectly charged by the bank as $40.
f. Bank service charges for October amounted to $60.
Instructions:
1. Prepare a bank reconciliation.
2. Illustrate the effects on the accounts and financial statements of the bank reconciliation.