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Can someone please identify the errors in the following bank reconciliation?Cash...

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linnie4352 | Student, Undergraduate | (Level 1) Salutatorian

Posted August 25, 2010 at 9:52 AM via web

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Can someone please identify the errors in the following bank reconciliation?

Cash according to bank statement  11,320

Add: outstanding checks 2,690                                        
Total     $14,010
Deduct: deposit of April 30, not
recorded by bank $3,330
Adjusted balance  $10,680
Cash according to company's records $7,003
Add: Proceeds of note collected by bank:
Principal  $4,000
Interest       120       $4,120
Service charge                  18         $4,138
Total                                           $11,141
Deduct: Check returned because of
insufficient funds  $ 945
Error in recording April 20
deposit of $5,300 as $3,500 $1,800      2,745
Adjusted balance   $ 8,396

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clamo88 | College Teacher | (Level 2) Adjunct Educator

Posted August 28, 2010 at 10:27 PM (Answer #1)

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Sometimes the biggest mistakes are the simplest things.  Start by making sure that credits are added and debits are subtracted (deducted).  That will affect everything else that follows.

On your "notes collected by bank," is that going to be an overall credit or debit to the account?  With the sub-charges affecting that item (interest & service charges), make sure you calculate that area separately and check your final figures that way.

Do you use a spreadsheet to do these types of problems?  That can help you verify the calculations, but again, make sure you have debits and credits in the correct columns.  They are not all done correctly in this exercise.

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