The cash account for Fred’s Sports Co. on June 1, 2010, indicated a balance of $16,515. During June, the total cash deposited was $40,150, and checks written totaled $43,600. The bank statement indicated a balance of $18,175 on June 30, 2010. Comparing the bank statement, the canceled checks, and the accompanying memos with the records revealed the following reconciling items:
a. Checks outstanding totaled $6,840.
b. A deposit of $4,275, representing receipts of June 30, had been made too late to appear on the bank statement.
c. A check for $640 had been incorrectly charged by the bank as $460.
d. A check for $80 returned with the statement had been recorded by Fred’s Sports Co. as $800. The check was for the payment of an obligation to Miliski Co. on account.
e. The bank had collected for Fred’s Sports Co. $3,240 on a note left for collection. The face of the note was $3,000.
f. Bank service charges for June amounted to $35.
g. A check for $1,560 from ChimTech Co. was returned by the bank because of insufficient funds.
Instructions
1. Prepare a bank reconciliation as of June 30.
2. Illustrate the effects on the accounts and financial statements of the bank reconciliation.