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    Adjusting Journal Entries and Corrected Bank Reconciliation

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    Bank Rec, Dec 31, 2004

    Balance per ledger Dec.31, 2004 $17,174.86
    Cash receipts received on the last day of December and
    charged to "cash in bank" on books but no deposited 2,662.25
    Debit memo for customer's cheque returned unpaid (cheque is on
    hand but no entry has been made on boks) 200.00
    Debit memo for bank service charge for December 5.50
    Total $20,142.61
    Cheques drawn but not paid by bank
    (see detailed list below) $2,267.75
    Credit memo for proceeds of a note receivable that
    had been left at the bank for collection but which
    has not been recorded as collected. 400.00
    Cheques for an account payable entered on books as
    $240.90 but drawn and pais by bank as $419.00 178.10 (2,945.85)
    Computed balance 17,196.76
    Unlocated difference (200.00)
    Balance per bank (checked for confirmation) 16,996.76

    Cheques drawn but not paid by bank:
    573 $67.27
    724 9.90
    903 456.67
    907 305.50
    911 482.75
    913 550.00
    914 366.76
    916 10.00
    917 218.90
    Total 2,267.75

    I need help preparing the corrected reconciliation and preparing the journal entries for items that should be adjusted prior to closing the books.

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    Solution Preview

    The solution is contained in the attached Excel worksheet. One comment ...

    Solution Summary

    The solution presents a corrected bank reconciliation in the two step format: book to bank and bank to book. The format is more understandable when looking for errors. The journal entries needed for the books are also written out in the solution.

    This is an auditing question and it contains an error not easily seen, but proper auditing technique would find it. The solution discloses the little trick too.