The Cash account of Safe and Secure Security Systems reported a balance of $2,490 at May 31, 2011. There were outstanding checks totaling $500 and a May 31 deposit in transit of $300. The bank statement, which came from Tri Cities Bank, listed the May 31 balance of $3,360. Included in the bank balance was a collection of $680 on account from Ryan Saar, a Safe and Secure customer who pays the bank directly. The bank statement also shows a $20 service charge and $10 of interest revenue that Safe and Secure earned on its bank balance.
R1. Prepare Safe and Securer's bank reconciliation at May 31.
Balance as per bank statement = 3360
Adjustments:
Add: Deposit in transit = 300
Less: Outstanding cheques = (500)
Adjusted balances as per bank statement = 3160
Bank balance as per cash book = 2490
Adjustments:
Add: Collection from Ryan Saar = 680
Less: Service charge = (20)
Add: Interest received = 10
Adjusted balance as per cash book = 3160
Adjusted balance as per cash book = Adjusted balance as per bank statement = 3160
7. Review your results from preparing Safe and Secure Security Systems' bank reconciliation problem #6.
Requirement
R1. Journalize the company's transactions that arise from the bank reconciliation. Include an explanation with each entry.