Bank Reconciliation The following information is available to assist you in preparing a bank…

Bank Reconciliation The following information is available to assist you in preparing a bank…

Bank Reconciliation

The following information is available to assist you in preparing a bank reconciliation for Karen’s

Catering on March 31, 2008:

a. The balance on the March 31, 2008, bank statement is $6,506.10.

b. Not included on the bank statement is a $423 deposit made by Karen’s late on March 31.

c. A comparison between the canceled checks listed on the bank statement and the company

records indicated that the following checks are outstanding at March 31:

d. The bank acts as a collection agency for checks returned for insufficient funds. The March bank

statement indicates that one such check in the amount of $45.00 was collected and deposited

and a collection fee of $4.50 was charged.

e. Interest earned on the checking account and added to Karen’s account during March was

$4.30. Miscellaneous bank service charges amounted to $22.

f. A comparison between the deposits listed on the bank statement and the company’s books

revealed that a customer’s check in the amount of $1,250 appears on the bank statement in

March but was never added to the customer’s account on the company’s books.

g. The comparison of checks cleared per the bank statement with those per the books revealed

that the wrong amount was charged to the company’s account for a check. The amount of the

check was $990. The proof machine encoded the check in the amount of $909, the amount

charged against the company’s account.

Required

1. Determine the balance on the books before any adjustments as well as the corrected balance

to be reported on the balance sheet.

2. What would you recommend Karen do as a result of the bank error in (g)? Why?

 

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