The October 31 bank statement of White's Healthcare has just arrived from Stat Bank. To prepare the bank reconciliation, you gather the following data: a. The October 31 bank balance is $5,170.
b. The bank statement includes two charges for NSF checks from customers. One is for S420 (#1), and the other is for S120
c. The following White checks are outstanding at October 31:

Check No. Amount
237 $90
288 150
291 580
294 590
295 10
296 150

d. White collects from a few customers by EFT. The October bank statement lists a Sl,400 EFT deposit for a collection on account.
e. The bank statement includes two special deposits that White hasn't recorded yet: Sl,050, for dividend revenue, and $50, the interest revenue White earned on its bank balance during October.
f. The bank statement lists a S70 subtraction for the bank service charge.
g. On October 31, the White treasurer deposited S290, but this deposit does not appear on the bank statement.
h. The bank statement includes a S700 deduction for a check drawn by Multi-State Freight Company. White notified the bank of this bank error.
i. White's Cash account shows a balance of S2,700 on October 31.

Required:
1. Prepare the bank reconciliation for White's Healthcare at October 31, 2012.
2. Journalize any required entries from the bank reconciliation. Include an explanation for each entry.

Required 1 :  Bank reconciliation

Bank Reconciliation Statement

Balance as per Bank Statement                    $5,170

Adjusted for error

Multi-State Freight Company                           $700

Balance as per adjusted Bank Statement    $5,870

Add Lodgements not yet credited :

White treasurer`s deposit                                 $290

Less Unpresented Cheques :

237                                                         $90

288                                                       $150

291                                                       $580

294                                                      $590

295                                                         $10

296                                                      $150   ($1,570)

Balance as per Cash Book                            $4,590

Required 2 : Journal entries

Journal 1.

Bank Service Charge $70 (debit)

Trade Receivables $540 (debit)

Bank $610 (credit)

Journal 2.

Bank $2,500 (debit)

Credit Transfer $ l,400 (credit)

Dividend Revenue $l,050 (credit)

Interest Revenue  $50 (credit)

Explanation:

The first step to prepare a bank reconciliation is to update the cash book.

Cash Book (Bank Balances)

Debit  :

Balance as per Cash Book                  $2,700

Credit Transfer                                     $ l,400

Dividend Revenue                                $l,050

Interest Revenue                                      $50

Totals                                                   $5,200

Credit :

Dishonored Cheques  ($420 + $120)   $540

Bank Service Charge                               $70

Adjusted Cash Book Balance            $4,590

Totals                                                   $5,200

The Next step is to prepare a Bank Reconciliation Statement

Bank Reconciliation Statement

Balance as per Bank Statement                    $5,170

Adjusted for error

Multi-State Freight Company                           $700

Balance as per adjusted Bank Statement    $5,870

Add Lodgements not yet credited :

White treasurer`s deposit                                 $290

Less Unpresented Cheques :

237                                                         $90

288                                                       $150

291                                                       $580

294                                                      $590

295                                                         $10

296                                                      $150   ($1,570)

Balance as per Cash Book                            $4,590

Journal Entries to Correct the Cash Book :

Journal 1.

Bank Service Charge $70 (debit)

Trade Receivables $540 (debit)

Bank $610 (credit)

Journal 2.

Bank $2,500 (debit)

Credit Transfer $ l,400 (credit)

Dividend Revenue $l,050 (credit)

Interest Revenue  $50 (credit)

answer; coefficient of correlation;