Your roommate, Samuel, is embarrassed. He has never before had a checking account, but he finally opened
Question:
Your roommate, Samuel, is embarrassed. He has never before had a checking account, but he finally opened one last month. He’s standing in the doorway of the kitchen with his check register in one hand and his recently arrived bank statement in the other. Admitting that he doesn’t know what to do next, he’s asked for your help in learning how to reconcile, or balance, his checkbook.
Being both a good friend and a student of personal finance, you’ve agreed to walk Samuel through the process. Moreover, knowing the value of asking and answering good questions when learning how to do something, Samuel agreed to answer your questions about the process.
SAMUEL: Thanks for helping me with this bank statement thing. So, where do we start?
YOU: Let’s start with some preliminary questions. I’ll ask and you answer, and we’ll agree on some fundamentals about reconciling bank accounts.
So, why is it a good idea to reconcile your bank account or balance your checkbook?
SAMUEL: According to my personal finance book, reconciling my account will help me spot potential errors in the bank statement or my own records, and it will verify my account’s actual balance as of thereconciliation date .
YOU: You’re absolutely correct! Now, according to the experts, how frequently should a bank reconciliation be performed, and how frequently should ongoing or between-statement deposits and withdrawals be verified with the bank?
SAMUEL: That’s an easy one. I remember reading that I should reconcile my bank accountmonthly , but I should verify my ongoing deposit and withdrawal transactions online every couple of days.
YOU: That’s right! Now that you’ve got the fundamentals under control, let’s go through the actual process of balancing the checkbook.
Now, with Samuel’s latest bank statement and his check register or ledger in hand, you can examine the documents. Use the grey slider along the right-hand side of each of the following boxes to see Samuel’s bank statement and check register (account ledger).
Fourth State Bank of San Francisco, CA
Statement of Account | ||||
---|---|---|---|---|
Samuel Smythe | March 2011 | |||
550 Angel Street | ||||
San Francisco, CA | Account 348596 | |||
Date | Description | Subtractions | Additions | Balance |
3-01 | Previous balance | $1,647.00 | ||
3-01 | Deposit | $250.00 | 1,897.00 | |
3-03 | Check 300 | $600.00 | 1,297.00 | |
3-04 | Check 301 | 300.00 | 997.00 | |
3-05 | ATM withdrawal | 25.00 | 972.00 | |
3-05 | Deposit | 62.50 | 1,034.50 | |
3-11 | ATM withdrawal | 35.15 | 999.35 | |
3-15 | Deposit | 250.00 | 1,249.35 | |
3-18 | Check 302 | 180.00 | 1,069.35 | |
3-21 | ATM withdrawal | 47.65 | 1,021.70 | |
3-22 | Deposit | 87.50 | 1,109.20 | |
3-24 | Check 303 | 60.00 | 1,049.20 | |
3-26 | ATM withdrawal | 50.00 | 999.20 |
Samuel’s Account Ledger
Date | Transaction Description | Deposit | Withdrawals | Balance |
Mar-01 | Deposit - Payroll | $250.00 | $1,897.00 | |
Mar-03 | Check 300 - Rent | $600.00 | 1,297.00 | |
Mar-04 | Check 301 - Car payment | 300.00 | 997.00 | |
Mar-05 | ATM withdrawal 87501 | 25.00 | 972.00 | |
Mar-05 | Deposit - Birthday gift | 62.50 | 1,034.50 | |
Mar-11 | ATM withdrawal 89502 | 35.15 | 999.35 | |
Mar-15 | Deposit - Payroll | 250.00 | 1,249.35 | |
Mar-18 | Check 302 - Groceries | 180.00 | 1,069.35 | |
Mar-21 | ATM withdrawal 93503 | 47.65 | 1,021.70 | |
Mar-22 | Deposit - Stipend | 87.50 | 1,109.20 | |
Mar-24 | Check 303 - Bookstore | 60.00 | 1,049.20 | |
Mar-26 | ATM withdrawal 94504 | 50.00 | 999.20 | |
Mar-27 | Check 304 - Dry cleaning | 48.00 | 951.20 | |
Mar-27 | ATM withdrawal 97505 | 100.75 | 850.45 | |
Mar-27 | Check 305 - Car insurance | 120.00 | 730.45 | |
Mar-28 | Deposit - Belated birthday gift | 187.50 | 917.95 | |
Mar-29 | ATM withdrawal 99506 | 37.50 | 880.45 |
Using the documentation from the bank and from Samuel’s check register, construct the bank reconciliation statement for March 29.
(Note: Any items that you enter into the bank reconciliation statement should be entered in the order in which they appeared on the account ledger and bank statement.)
A.
Samuel Smythe’s Bank Reconciliation for March 29 | ||
---|---|---|
Ending balance per bank statement, March 26 | ||
Add: Deposit in transit | ||
Deduct: Outstanding checks and ATM transactions | ||
Check number | ||
ATM number | ||
Check number | ||
ATM number | ||
Total withdrawals | ||
Adjusted bank balance | ||
Balance per books, March 29 |
Accounting Information Systems basic concepts and current issues
ISBN: 978-0078025334
3rd edition
Authors: Robert Hurt