Peterson Company's general ledger shows a cash balance of $7,480 on May 31. May cash receipts of $1,230, included in the general ledger balance, are placed in the night depository at the bank on May 31 and processed by the bank on June 1. The bank statement dated May 31 shows an NSF check for $110 and a service fee of $80. The bank processes all checks written by the company by May 31 and lists them on the bank statement, except for one check totaling $1,780. The bank statement shows a balance of $7,840 on May 31. Prepare a bank reconciliation to calculate the correct ending balance of cash on May 31. (Amounts to be deducted should be indicated with a minus sign.)

Bank Reconciliation: The bank reconciliation deals with the bank statement balance and the cash statement balance. The motive is to compare these two statements so that the organization can run in the smoothly manner.

There are various transactions due to which the bank statement balance and the cash statement balance do not match. To match these statements, we adjust the transactions accordingly.

The preparation of the bank reconciliation statement on May 31 is presented in the spreadsheet. Kindly find the attachment below:

suchetasVT suchetasVT · Answer 2 · 2022-03-15T16:49:04+01:00

A bank reconciliation statement is prepared by the company on a particular date in order to reconcile the bank balance into the cash with the balance as per the passbook showing the reasons for the difference between the two.

Why bank reconciliation statement is prepared?

Bank reconciliation statements ensure that payments are processed and that deposits are deposited into the bank. The Reconciliation Statement helps to identify differences between the bank balance and the cash balance, to consider necessary changes or adjustments.

As per the given information, bank reconciliation statement is prepared and attached in the image below.

Hence, The balances as per the cash book stand at $ 7,290 and as per the pass book at $7,290 on May 31 after reconciling the differences between the two.

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