Bank Reconciliation and Adjusting Entries for Blossom Company
How can Blossom Company reconcile its cash balance with the bank statement as of July 31, 2022?
What are the adjustments needed to align the cash balance per books with the actual bank balance?
Bank Reconciliation and Adjusting Entries
To reconcile the cash balance of Blossom Company with the bank statement as of July 31, 2022, the following adjustments need to be made:
- Adjusted cash balance per books: $6,240.00
- Outstanding checks: $1,933.10
- NSF check: $675.00
- Deposits in transit: $1,294.30
- Error in recording check No. 2480: $9.00
- Electronic funds transfer received: $1,620.00
- Bank service charge: $24.00
- Cash balance per books
Bank Reconciliation Process
When reconciling the cash balance with the bank statement, it is essential to include all deposits and withdrawals accurately. By comparing the bank statement with the company's Cash account, any discrepancies can be identified and resolved through adjustments.
Adjustments such as outstanding checks, NSF checks, deposits in transit, errors in recording checks, electronic funds transfers, and bank service charges are crucial to ensuring the accuracy of the cash balance.
By reconciling the cash balance per books with the bank statement, Blossom Company can track its actual financial standing and make informed decisions based on accurate data.
It is important to properly document and record all adjusting entries to maintain transparency and accountability in financial transactions. By following these steps, Blossom Company can ensure the integrity of its financial records and make sound financial decisions moving forward.