Reconcile Two Cash Records

5 questions0m 0s

Learn the skill

Use records for the same date. A deposit in transit is already in the workshop books but not yet on the bank statement: add it to the bank side. Outstanding checks have already reduced the books but have not cleared the bank: subtract them from the bank side. Interest and fees shown only by the bank must update the books. Reconciliation compares adjusted balances; it does not move money.

Worked example

Separate example: bank 90 + deposit in transit 20 - outstanding check 15 = 95. Books 99 + unrecorded interest 2 - unrecorded fee 6 = 95. Record the interest and fee in the books, but do not record the deposit or check twice.

Separate example: bank 90 plus deposit 20 minus check 15 equals 95. Books 99 plus interest 2 minus fee 6 equals 95. Only the interest and fee need new book entries. — Two routes to the same adjusted cash amount; use the different records below for your answers.

Fictional workshop / same closing date

All amounts are fictional dollars. Bank statement: 180. Workshop Cash in the books: 187. A deposit of 40 is in the books but not on the statement. Checks of 25 and 15 are in the books but have not cleared the bank. Interest of 3 and a fee of 10 appear on the statement but not in the books. There are no other differences or errors. Do not use real account records.

Question 1 What is the total of the outstanding checks? Answer

Question 2 What is the adjusted bank balance? Answer

Question 3 What is the adjusted book Cash balance? Answer

Question 4 Which book entry records the 10-dollar fee? Debit Bank Fee Expense 10; credit Cash 10 Debit Cash 10; credit Bank Fee Expense 10 No entry, because the bank knows about it

Question 5 Should the workshop record the 40-dollar deposit in its books again? Yes, to make Cash larger No, it is already recorded there Yes, as an expense