Hazel in the process of monitoring store activities

Hazel, in the process of monitoring store activities, may notice if a sale is not rung up.
Third, Hazel hires bonded employees who are experienced. Fourth, Hazel provides train-
ing in procedures. These procedures are no guarantee, but they lessen the risk of loss of
cash in the cashier function.

P4. Bank Reconciliation
1. Sedona, Inc.
Bank Reconciliation
May 31, 2014
Balance per bank, May 31, 2014 $52,351.46
Add:
Deposit in transit
$ 5,220.94
Check of another company mistakenly
deducted by bank
850.00 6,070.94
$58,422.40
Less outstanding checks
3,936.80
Adjusted bank balance, May 31, 2014
$54,485.60
Balance per books, May 31, 2014
$42,754.16
Add: Note receivable collected by bank $12,000.00
Interest on note collected by bank 360.00
Interest on average balance
120.00 12,480.00
$55,234.16
Less:
Check recorded incorrectly in check register
$ 540.00
Bank service charge 25.00
NSF check of Eva Mendez
183.56 748.56
Adjusted book balance, May 31, 2014
$54,485.60
2. 2014
May 31 Cash 12,360.00
Notes Receivable
12,000.00
Interest Income 360.00
Note and interest collected by bank
31 Cash 120.00

Interest Income
120.00
Interest on average bank account
balance
31
Purchases or Merchandise Inventory
540.00
Cash
540.00
To correct an incorrect entry for
purchase of merchandise
$1,920 – $1,380 = $540
31 Bank Service Charges Expense 25.00
Cash 25.00
Bank service charge for May
31 Accounts Receivable 183.56
Cash 183.56
NSF check of Eva Mendez returned
by bank
3. The adjusted cash balance of $54,485.60 should appear on the balance sheet.
P4.
Bank Reconciliation
4. A bank reconciliation is a necessary internal control because events and items such
as notes receivable collected by the bank, interest income on notes, interest income,
overstatement of deposits, collection fees, NSF checks, and service charges, which
are unknown on internal book records, must be updated to reflect current data. As
an outside record, the bank statement provides a check on the internal accounting
records of the company and proves that all cash transactions have been recorded.