Organic Food Co.'s cash account shows a $6,500 debit balance and its bank statement shows $5,860 on deposit at the close of business on August 31. A. August 31 cash receipts of $2,240 were placed in the bank’s night depository after banking hours and were not recorded on the August 31 bank statement. B. The bank statement shows a $220 NSF check from a customer; the company has not yet recorded this NSF check. C. Outstanding checks as of August 31 total $2,120. D. In reviewing the bank statement, an $180 check written by Organic Fruits was mistakenly drawn against Organic Food’s account. E. The August 31 bank statement lists $120 in bank service charges; the company has not yet recorded the cost of these services.

Answer and Explanation:

The preparation of the bank reconciliation statement is presented below:

                                            Organic Food Co.

                                 Bank reconciliation statement  

Particulars                Amount              Particulars                   Amount  

Bank cash balance   $5,860           Company cash balance $6,500

Add: Deposits                                       Less: NSF check         -$220

in transit                     $2,240               Less: service fee          $120

Add: Correction        $180

Less: Outstanding                                  

Check -                       -$2,120

Bank balance                                        Company balance

After reconciliation   $6,160                After reconciliation $7,955        

It is the statement which balance the cash balance and bank balance after these adjustments made

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