Nolan Company deposits all cash receipts on the day when they are received and it makes all cash payments by check. At the close of business on June 30, 2015, its Cash account shows a $26,444 debit ba

Bank Reconciliation Statement for Nolan Company as of June 30, 2015: Balance per bank statement: $25,250.00 Add: Deposit in transit: $3,997.00 Adjusted Bank Balance: $29,247.00 Less: Outstanding checks: $2,792.00 Adjusted Book Balance: $26,455.00 Adjustments: a. Outstanding Checks: $2,792.00 b. Bank Service Charge: $37.00 c. Book Error: $9.00 (89.00 – 80.00) Adjusted Book Balance: $26,611.00 Adjusted Bank Balance: $29,247.00 Adjusted Book Balance: $26,611.00 Reconciliation: Balance per bank statement: $25,250.00 Add: Deposit in transit: $3,997.00 Add: Interest earned: $39.00 Less: Outstanding checks: $2,792.00 Less: Bank Service Charge: $37.00 Adjusted Bank Balance: $29,457.00 Balance per books: $26,444.00 Add: Book Error: $9.00 Adjusted Book Balance: $26,453.00 Adjusted Bank Balance: $29,457.00 Adjusted Book Balance: $26,453.00 Explanation: A bank reconciliation statement is a process of comparing the bank statement balance with the company's book balance, and then making necessary adjustments to reconcile them. In this case, the bank statement balance is $25,250. Nolan Company has deposited $3,997 in the bank's night depository, but it was not recorded in the bank statement. Therefore, it is added to the bank statement balance. Outstanding checks (checks issued but not yet presented for payment) as of June 30, total $2,792, which is deducted from the balance per bank statement to get the adjusted bank balance of $29,247. Next, adjustments are made to the book balance to reconcile it with the adjusted bank balance. The June 30 bank statement included a $37 debit memorandum for bank services, which the company has not yet recorded. Thus, it is added to the book balance. Also, a check written by the company for $80 was mistakenly recorded in the company's books at $89. Therefore, $9 must be subtracted from the book balance. The resulting adjusted book balance is $26,611. After making the adjustments, the adjusted bank balance and the adjusted book balance are compared. They should be equal if the bank reconciliation process is performed correctly. In this case, the adjusted bank balance is $29,457, and the adjusted book balance is $26,453. Therefore, there is a difference of $3,004 between the two balances. This difference is due to the deposit in transit, which has not yet been recorded in the bank statement.