The bank statement of the Fast Company shows a balance of $10,000 on 31 January 2015

whereas the company’s ledger shows a balance of $8,525. The following reasons have
been identified for this discrepancy.

1. An amount of $822 sent to the bank for deposit on January 31, 2015 does not
appear in the bank statement. (Less)
2. The following checks issued during the month of January have not yet been cleared
(not given money) by the bank. (High)
Check No: 201, Issue date: 15 January 2015, Amount; $200;
Check No: 212, Issue date: 19 January 2015, Amount; $20;
Check No: 216, Issue date: 25 January 2015, Amount; $610;
3. A note receivable amounting to $1,588 has been collected by bank for the company.
(High)
4. The bank statement shows that interest amounting to $50 has been earned (income)
on average account balance during January. (High)
5. The bank has charged $10 for the collection of a note. (Less)
6. A check of $100 deposited by the company has been charged back as NSF. (Less)
7. An amount of $25 has been deducted by bank as service charges for the month of
January. (Less)
8. The check no. 220 is issued to electricity company. The check is in the amount of
$95 but is erroneously recorded in the cash payments journal as $59. (Less)

Required: Prepare a bank reconciliation statement for the Fast Company using above
information. Also make journal entries to update the accounting records of the company.

Solution

Bank balance as per Bank statement   10000

Add: Deposit not entered 822  
Bank charge 10  
Check not collected due to NSF 100  
Bank Charges 25  
Error in recording Electricity in Cash book (95 - 59) = 36 36  
    993
Less: Checks not cleared (200+20+610) 830  
Receivable amount collected by bank 1588  
Bank interest earned 50  
    -2468
Balance as per cash account   8525

Bank account (in Company)

 750

Electric 59

Balance 691

Bank Statement

750 Check 95

Balance 645