Prepare The Bank Reconciliation For This Company As Of July

Prepare the bank reconciliation for this company as of July 31, 2011

The following information is available to reconcile Clark Company’s book balance of cash with its bank statement cash balance as of July 31, 2011: a. The company's Cash account has a $24,754 debit balance; the bank statement shows a $27,407 cash balance. b. Outstanding checks include Check No. 3031 for $1,650 and Check No. 3040 for $817 from June 30; Check No. 3040 is listed as canceled but Check No. 3031 isn't. Checks No. 3065 for $601 and No. 3069 for $2,418, written in July, are not yet canceled. c. Check No. 3056 for $1,220 (July rent) was correctly written but incorrectly recorded as $1,210. d. The bank collected $7,500 on a non-interest-bearing note, deducting a $38 fee; Clark hadn’t recorded this. e. A NSF check for $795 plus a $10 NSF fee were listed; the company hasn't recorded the NSF yet. f. Bank service charges of $11, listed as a debit memo, are unrecorded. g. July 31 cash receipts of $8,652 placed in the depository are not reflected in the bank statement.

Bank Reconciliation as of July 31, 2011

Bank statement balance: 27,407

Book balance: 24,754

Adjustments to Bank Balance

• Add: Outstanding checks not yet cleared: Check No. 3031 ($1,650), Check No. 3040 ($817), Check No. 3065 ($601), Check No. 3069 ($2,418)
• Less: Checks recorded but not cleared (Check No. 3056 adjustment): $10 (difference between $1,220 and $1,210)
• Add: Deposit in transit (cash receipts of 8,652 not reflected): $8,652
• Plus: Bank collection of note (less fee): 7,500 - 38 = 7,462
• Less: NSF check and fee: 795 + 10 = 805
• Less: Bank service charge: 11

Adjusted bank balance: 27,407 + 1,650 + 817 + 601 + 2,418 + 8,652 + 7,462 - 805 - 11 - 10 = 48,084

Adjustments to Book Balance

• Add: Bank collection on note: 7,462
• Less: NSF check (not recorded): 795
• Less: NSF fee: 10
• Less: Bank service charge: 11

Adjusted book balance: 24,754 + 7,462 - 795 - 10 - 11 = 31,400

Final Reconciled Balances

Note: The bank’s adjusted balance is $48,084; the book's adjusted balance is $31,400. The discrepancy may indicate additional errors or outstanding transactions. For reconciliation purpose, they should be made equal by adjusting either the books or the bank records accordingly.

Journal Entries to Record Adjustments as of July 31, 2011

References

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