Share
Explore BrainMass

Preparing a Bank reconciliation

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.

Solution Preview

The attached Excel Worksheet provides detailed solution to the problem given above.

The problem ...

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.

$2.19