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Two-Sided Bank Reconciliation and Balance Sheet

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The cash account for Fit Bike Co. at August 1, 2014, indicated a balance of $12,190. During August, the total cash deposited was $28,100 and checks written totaled $33,010. The bank statement indicated a balance of $12,550 on August 31. Comparing the bank statement, the canceled checks, and the accompanying memos with the records revealed the following reconciling items:
a) Checks outstanding totaled $7,440
b) A deposit of $2,880 representing receipts of August 31, had been made too late to appear on the bank statement.
(c) The bank had collected for Fit Bike Co. $2080 on a note left for collection. The face of the note was $2,000.
(d) A check for $580 returned with the statement had been incorrectly charged by the bank as $850.
(e) A check for $640 returned with the statement had been recorded by Fit Bike Co. as $460. The check was for the payment of an obligation to Brown Co. on account.
(f) Bank service charges for August amounted to $20.
(g) A check for $900 from Murdock Co. was returned by the bank due to insufficient funds.

Instructions:
(1) Prepare a bank reconciliation as of August 31
(2) Journalize the necessary entries. The accounts have not been closed.
(3) If a balance sheet were prepared for Fit. Bike Co. on August 31, 2014, what amount should be reported as cash?

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This solution illustrates how to compute cash per books at the end of the month and how to perform a two-sided bank reconciliation.

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