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Preparing a Bank reconciliation

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On May 31, 2007, Galenti Company had a cash balance per books of $5,681.50. The bank statement from Community Bank on that date showed a balance of $7,964.60. A comparison of the statement with the cash account revealed the following facts.

1. The statement included a debit memo of $70 for the printing of additional company checks.
2. Cash sales of $786.15 on May 12 were deposited in the bank. The cash receipts journal entry and the deposit slip were incorrectly made for $796.15. The bank credited Galenti Company for the correct amount.

3. Outstanding checks at May 31 totalled $806.25, and deposits in transit were $836.15.

4. On May 18 the company issued check No. 1181 for $685 to N. Habben, on account. The check, which cleared the bank in May, was incorrectly journalized and posted by Galenti Company for $658.

5. A $3,000 note receivable was collected by the bank for Galenti Company on May 31 plus $80 interest. The bank charged a collection fee of $30. No interest has been accrued on the note.

6. Included with the cancelled checks was a check issued by Gallen Company to C. Young for $290 that was incorrectly charged to Galenti Company by the bank.

7. On May 31 the bank statement showed an NSF charge of $340 for a check issued by K. Uzong, a customer, to Galenti Company on account.

(a) Prepare the bank reconciliation as of May 31, 2007.
(b) Prepare the necessary adjusting entries at May 31, 2007.

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Solution Summary

The problem given is to reconcile the cash balance with the amount stated on the Bank statement. The solution contains explanations and guideline on how to do a bank reconciliation. The solution will be useful to both students and other professionals interested in doing bank reconciliation.

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Chidi Ngene, M. Sc.
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  • B. Sc., University of Nigeria
  • M. Sc., London South Bank University
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