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Chapter 7, End of Chapter, Self-Study Demonstration Problem, Exercise 1

# Jason Kuhn's check stubs indicated a balance of \$4,565.12 for Kuhn's Wilderness Outfitters on March 31. This included a record of a deposit of \$926.10 mailed to the bank on March 30, but not credited to Kuhn's account until April 1. In addition, the following checks were outstanding on March 31: No. 462\$524.26No. 465\$213.41No. 473\$543.58No. 476\$351.38No. 477\$197.45 The bank statement showed a balance of \$5,419 as of March 31. The bank statement included a service charge of \$4.10 with the date of March 29. In matching the canceled checks and record of deposits with the stubs, it was discovered that Check No. 456, a payment on account to Office Suppliers, Inc., for \$39 was erroneously recorded on the stub as \$93. This caused the bank balance on that stub and those following to be \$54 too small. It was also discovered that an ATM withdrawal of \$100 for personal use was not recorded on the books. Kuhn maintains a \$200 petty cash fund. His petty cash payments record showed the following totals at the end of March of the current year:This left a balance of \$2.55 in the petty cash fund, and the fund was replenished. Prepare a bank reconciliation for Jason Kuhn as of March 31, 20--.

### Explanation

Bank balance :

Bank balance is \$5,419. Deposit in transit of \$926.1 is added and 5 checks totalling \$1,830.08 that have been issued but not yet presented to the bank are deducted.

Book Balance:

Book balance is \$4,565.12. Erroneous check number 456 over-recorded by \$54 is corrected by adding back \$54 to book balance. Unrecorded bank service charge of \$4.10 and unrecorded ATM withdrawal of \$100 is recorded by reducing the book balance by the respective amounts.