Reference no: EM132949867

Problem 1: Onion Company of Kelis has a policy of depositing all receipts and making all the payments by cheuqe. The new bookkeeper of the company, Bill Free, is quiet upset on receiving the bank statement as the cash balance in the ledger is $4,209.50 whereas the balance on the bank statement is $4,440.50. Bill is convinced that the bank has made an error. Do you think his concern is valid, given that the following information is provided to you? Prepare a bank reconciliation statement for the Company and propose a suggestion to Bill to justify your reconciled balance.

a. The November 30, 2022 cash receipt of $611 had been placed in the bank's night depository after banking hours and consequently did not appear on the bank statement as a deposit.

b. Two debit memoranda and a credit memorandum were included with the returned cheques. None of them had been recorded at the time of the reconciliation. The first debit memorandum covered a $130 NSF Cheque written by Abby Ellen. The second was $6.50 debit memorandum for service charges. The credit memorandum was $494 and represented the proceeds less a $6 collection fee from a $500 non-interesting bearing note collected for Onion Company by the bank.

c. It was also found that the cheques no. 942 for $71.50 and cheque no. 947 for $206.50, both written and recorded on November 28 were not among the cancelled cheques returned.

d. Bill found that cheque no. 899 was correctly drawn for $1,094 as a payment for a new cash register. However, this cheque was recorded as though it were for $1,148.

e. The October Bank reconciliation showed two cheques outstanding on September 30, No. 621 for $152.50 and No. 630 for $179.30. Cheque no. 63 was paid and returned with the November bank statement but Cheque no. 621 was not.