Blue Company Is Unable to Reconcile the Bank Balance at January

question 208

Essay

Blue Company is unable to reconcile the bank balance at January 31. Blue's reconciliation is as follows. $\begin{array}{lr}\text { Cash balance per bank } & \$ 5,300 \\\text { Add: NSF check } & 1,490 \\\text { Less: Bank service charge } & 25\\\text { Adjusted balance per bank } & \$ 6,765 \\\text { Cash balance per books } & \$ 5,905 \\\text { Less: Deposits in transit } & 950 \\\text { Add: Outstanding checks } & 1,860\\\text { Adjusted balance per books }&\$ 6,815\end{array}$ Instructions
(a) Prepare a correct bank reconciliation.
(b) Journalize the entries required by the reconciliation.

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Definitions:

Open-end Credit

A pre-approved loan between a financial institution and borrower that can be used repeatedly up to a certain limit and can be repaid prior to payments coming due.

Unpaid Balances

Amounts owed that have not been paid by the due date.

Unsolicited Merchandise

Goods sent to a person without their request, often with the implication that payment is expected if the goods are used or not returned.

Gift

A voluntary transfer of property or funds from one person to another without consideration or expectation of return.