Prepare a bank reconciliation for XYZ Company at September 30 using the following information:
Balance per XYZ Company bank statement at September 30. $ 7,351.10
Outstanding checks 5,645.45
NSF checks from customers 444.22
Deposits in transit 7,135.46
Interest Revenue 100.00
Service charge 230.30
Cash balance per XYZ's records at September 30 9,415.63
Please see attached Word document.
A company's cash balance according to their bank statement and their cash balance according to their accounting records usually do not match. This is normally due to the fact that, at any particular date, checks may be outstanding, deposits may be in transit to the bank, errors may have occurred etc. Therefore companies have to carry out bank reconciliation process that prepares a statement accounting for the difference between the cash balance in company's cash account and the cash balance according to its bank statement.
This solution explains how to prepare a bank reconciliation for a company using given financial information.