Preparing Cash Book and Bank Reconciliation for July 2022
What are the steps to prepare an updated cash book for July 31, 2022, based on the bank transactions provided? How to create a bank reconciliation statement for the same date?
Preparing Updated Cash Book for July 31, 2022
1. Record the opening balance of $56,000 on July 1.
2. Enter all bank deposits and checks in the bank column as per the transactions provided.
3. Calculate the updated balance after each transaction.
4. Record the closing balance on July 31, 2022, which should be $95,500.
Creating Bank Reconciliation for July 31, 2022
To create a bank reconciliation:
1. Start with the bank statement balance of $100,000.
2. Deduct outstanding checks for B. Jorgensen and K. Gilbert ($15,000 + $12,500 = $27,500).
3. Add the deposit in transit for K. Smith of $8,000.
4. The adjusted bank balance should be $80,500.
5. Compare this with the cashbook balance of $98,500.
6. Make adjustments for bank service charges and interest income ($1,000 - $2,000 = $3,000).
7. The adjusted cashbook balance should be $95,500.