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The Corporate Finance Institute Accounting
Example: XYZ Company is closing its book and must prepare a bank
reconciliation for the following items:
• Bank statement contains an ending balance of $300,000
• Bank statement contains a $100 service charge for operating the account
• Bank statement contains interest income of $20
• XYZ issued $50,000 of cheques that have not yet cleared the bank
• XYZ deposited $20,000 but did not appear in the bank statement
Item # Adjustment to Books
Bank Balance $300,000 1
Deduct: Service charge -100 2 Debit expense, credit cash
Add: Interest income +20 3 Debit cash, credit interest income
Deduct: Uncleared cheques -50,000 4 None
Add: Deposit in transit +20,000 5 None
Book Balance $269,920
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