Question: Bank Reconciliation
Ling Corp., makes all payments by cheque and deposits all receipts intact. The following information is available from the cash records:
April 30th
Bank Reconciliation
Balance per bank $7,060
Add: Deposits in transit 1,540
Deduct: Outstanding Cheques (1,840)
Balance per books $6,760
Per Bank Per Books
Balance on May 31 $8,760 $9,405
May deposits 4,960 5,710
May cheques 3,880 3,000
May note collected (not included in May deposits 1,060
May bank service charge 26
May NSF cheque from customer, returned by bank 349
(recorded by bank as a charge)
Required: Noting that there is a timing lag between deposits and cheques being recorded in the books and when they are recorded in the bank, determine the following:
a) Outstanding deposits at May 31
b) Oustanding cheques at May 31
c) Prepare May 31 bank reconciliation, in the format found in illustration 7A-1, showing the balance per bank statement and the balance per books, as well as the correct cash balance. (see format illustration 7A-1)