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Accounting: Bank reconciliation

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1. What's bank reconciliation? Is it important to reconcile books on a regular basis? What are the steps? Please prepare bank reconciliation for the following scenario:

Prepare a July 31 bank reconciliation statement and the resulting journal entries for the Simmons Company. The July 31 bank statement indicated a cash balance of $9,610, while the cash ledger account on that date shows a balance of $7,430.

1. Outstanding checks totaled $2,417.
2. A $500 check mailed to the bank for deposit had not reached the bank at the statement date.
3. The bank returned a customer's NSF check for $225 received as payment of an account receivable.
4. The bank statement showed $30 interest earned on the bank balance for the month of July.
5. Check 781 for supplies cleared the bank for $268 but was erroneously recorded in our books as $240.
6. A $486 deposit by Acme Company was erroneously credited to our account by the bank.

2. What's Internal Control and what internal controls are used with regards to cash receipts and cash payments?

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Solution Summary

The problem deals with bank reconciliation.

Solution provided by:
Chidi Ngene, M. Sc.
Education
  • B. Sc., University of Nigeria
  • M. Sc., London South Bank University
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