END-OF-CHAPTER PROBLEMS

Check figures for odd-numbered problems in Appendix C. Name Date

4
drill problems
4–1. Fill out the check register that follows with this information for July 2015:   LU 4-1(1)
July 7     Check No. 959 AT1T $143.50
15 Check No. 960 Staples 66.10
19 Deposit 800.00
20 Check No. 961 West Electric 451.88
24 Check No. 962 Bank of America 319.24
29 Deposit 400.30

RECORD ALL CHARGES OR CREDITS THAT AFFECT YOUR ACCOUNT

FEE BALANCE
NUMBER DATE DESCRIPTION OF TRANSACTION PAYMENT/DEBIT (IF ANY) DEPOSIT/CREDIT $
2015 (–) (–) (+) 4,500 75
$ $ $
959 AT+T 143 50 – 143 50
4,357 25
960 Staples 66 10 – 66 10
4,291 15
Deposit 800 00 + 800 00
5,091 15
961 West Electric 451 88 – 451 88
4,639 27
962 Bank of America 319 24 – 319 24
4,320 03
Deposit 400 30 + 400 30
$4,720 33

4–2. November 1, 2015, Payroll.com, an Internet company, has a $10,481.88 checkbook balance. Record the following transactions
for Payroll.com by completing the two checks and check stubs provided. Sign the checks Garth Scholten, controller.   LU 4-1(2)
a.  November 8, 2015, deposited $688.10
b.  November 8, check No. 190 payable to Staples for office supplies—$766.88
c.  November 15, check No. 191 payable to Best Buy for computer equipment—$3,815.99.

190 766.88 PAYROLL.COM

190
November 8 15 1 LEDGER RD.
ST. PAUL, MN 55113
Staples
Office Supplies November 8 15
88
10,481 88 Staples 766 100
688 10 88
Seven hundred sixty-six and 100
IPSWICH BANK
11,169 98 ipswichbank.com Garth Scholten
766 88 Office Supplies Controller
10,403 10 A011000138A 25 11103 190
Copyright © 2017 by McGraw-Hill Education. All rights reserved.

191 3,815.99 PAYROLL.COM

191
November 15 15 1 LEDGER RD.
ST. PAUL, MN 55113
Best Buy
Comp. equipment November 15 15
99
10,403 10 Best Buy 3,815 100
99
Three thousand eight hundred fifteen and 100
IPSWICH BANK
10,403 10 ipswichbank.com Garth Scholten
3,815 99 Computer equipment Controller
6,587 11 A011000138A 25 11103 191

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 4–3. Using the check register in Problem 4–1 and the following bank statement, prepare a bank reconciliation for Lee.com.  
LU 4-2(3)

BANK STATEMENT

Date Checks Deposits Balance

7/1 balance $4,500.75

7/18 $143.50 4,357.25

7/19 $800.00 5,157.25

7/26 319.24 4,838.01

7/30 15.00 SC 4,823.01

Lee.com checkbook balance $4,720.33 Bank balance $4,823.01

  Add:
    Deposit in transit 400.30
  Deduct:   Deduct:
    Service charge 15.00     Outstanding checks:
      No. 960 $ 66.10
      No. 961 451.88 517.98
Ending checkbook balance $4,705.33 Ending bank balance $4,705.33

word problems
4–4. The World Bank forecasts growth of world trade to be 3%, up from 2.6% in 2014. This change has caused Galapagos
Islands Resort to analyze its current financial situation, beginning with reconciling its accounts. Galapagos Islands
Resort received its bank statement showing a balance of $8,788. Its checkbook balance is $15,252. Deposits in
transit are $3,450 and $6,521. There is a service charge of $45 and interest earned of $3. Notes collected total $1,575.
Outstanding checks are No. 1021 for $1,260 and No. 1022 for $714. All numbers are in U.S. dollars. Help Galapagos
Islands Resort reconcile its balances.   LU 4-2(3)

Galapagos Islands Resort checkbook balance$15,252 Bank balance $  8,788

  Add:   Add:
    Interest earned $    3     Deposits in transit $3,450
    Notes collected 1,575 1,578 6,521  9,971
$16,830 $18,759
  Deduct:   Deduct:
    Service charge 45     Outstanding checks:
      No. 1021 $1,260
      No. 1022 714 1,974
Reconciled balance $16,785 Reconciled balance $16,785

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 4–5. The U.S. Chamber of Commerce provides a free monthly bank reconciliation template at business.uschamber.com/tools/
bankre_m.asp. Annie Moats just received her bank statement notice online. She wants to reconcile her checking account
with her bank statement and has chosen to reconcile her accounts manually. Her checkbook shows a balance of $698. Her
bank statement reflects a balance of $1,348. Checks outstanding are No. 2146, $25; No. 2148, $58; No. 2152, $198; and
No. 2153, $464. Deposits in transit are $100 and $50. There is a $15 service charge and $5 ATM charge in addition to
notes collected of $50 and $25. Reconcile Annie’s balances.   LU 4-2(3)

Annie’s checkbook balance $698 Bank balance $1,348

  Add:   Add:
    Notes collected $50     Deposits in transit $100
25 75 50 150
$773 $1,498
  Deduct:   Deduct:
    Service charge $15     Outstanding checks:
    ATM charge 5 20       No. 2146 $ 25
      No. 2148 58
      No. 2152 198
      No. 2153 464 745
Reconciled balance $753 Reconciled balance $  753

4–6. A local bank began charging $2.50 each month for returning canceled checks. The bank also has an $8.00 “maintenance”
fee if a checking account slips below $750. Donna Sands likes to have copies of her canceled checks for preparing her
income tax returns. She has received her bank statement with a balance of $535.85. Donna received $2.68 in interest
and has been charged for the canceled checks and the maintenance fee. The following checks were outstanding: No. 94,
$121.16; No. 96, $106.30; No. 98, $210.12; and No. 99, $64.84. A deposit of $765.69 was not recorded on Donna’s bank
statement. Her checkbook shows a balance of $806.94. Prepare Donna’s bank reconciliation.   LU 4-2(3)

Donna’s checkbook balance $806.94 Bank balance $ 535.85

  Add:   Add:
    Interest 2.68     Deposit in transit 765.69
$809.62 $1,301.54
  Deduct:   Deduct:
    Canceled check $2.50     Outstanding checks:
    Maintenance fee 8.00 10.50       No. 94 $121.16
      No. 96 106.30
      No. 98 210.12
      No. 99 64.84 502.42
Reconciled balance $799.12 Reconciled balance $ 799.12
Copyright © 2017 by McGraw-Hill Education. All rights reserved.

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 4–7. Ben Luna received his bank statement with a $27.04 fee for a bounced check (NSF). He has an $815.75 monthly mortgage
payment paid through his bank. There was also a $3.00 teller fee and a check printing fee of $3.50. His ATM card fee
was $6.40. There was also a $530.50 deposit in transit. The bank shows a balance of $119.17. The bank paid Ben $1.23
in interest. Ben’s checkbook shows a balance of $1,395.28. Check No. 234 for $80.30 and check No. 235 for $28.55 were
outstanding. Prepare Ben’s bank reconciliation.   LU 4-2(3)

Ben’s checkbook balance $1,395.28 Bank balance $119.17

  Add:   Add:
    Interest 1.23     Deposit in transit 530.50
$1,396.51 $649.67
  Deduct:   Deduct:
    NSF $ 27.04     Outstanding checks:
    Mortgage automatic       No. 234 $80.30
      withdrawal 815.75       No. 235 28.55 108.85
Teller fee 3.00
Printing fee 3.50
ATM card fee 6.40 855.69
Reconciled balance $ 540.82 Reconciled balance $540.82

4–8. Kameron Gibson’s bank statement showed a balance of $717.72. Kameron’s checkbook had a balance of $209.50. Check
No. 104 for $110.07 and check No. 105 for $15.55 were outstanding. A $620.50 deposit was not on the statement. He has
his payroll check electronically deposited to his checking account—the payroll check was for $1,025.10. There was also
a $4 teller fee and an $18 service charge. Prepare Kameron Gibson’s bank reconciliation.   LU 4-2(3)

Kameron’s checkbook balance $ 209.50 Bank balance $ 717.72

  Add:   Add:
    Direct deposit 1,025.10     Deposit in transit 620.50
$1,234.60 $1,338.22
  Deduct:   Deduct:
    Teller fee $ 4.00     Outstanding checks:
    Service charge 18.00 22.00       No. 104 $110.07
      No. 105 15.55 125.62
Reconciled balance $1,212.60 Reconciled balance $1,212.60

4–9. Banks are finding more ways to charge fees, such as a $25 overdraft fee. Sue McVickers has an account in Fayetteville;
she has received her bank statement with this $25 charge. Also, she was charged a $6.50 service fee; however, the good
news is she earned $5.15 interest. Her bank statement’s balance was $315.65, but it did not show the $1,215.15 deposit
she had made. Sue’s checkbook balance shows $604.30. The following checks have not cleared: No. 250, $603.15; No.
253, $218.90; and No. 254, $130.80. Prepare Sue’s bank reconciliation.   LU 4-2(3)

Sue’s checkbook balance $604.30 Bank balance $ 315.65

  Add:   Add:
    Interest 5.15     Deposit in transit 1,215.15
$609.45 $1,530.80
  Deduct:   Deduct:
    Service charge $ 6.50     Outstanding checks:
    Overdraft 25.00 31.50       No. 250 $603.15
      No. 253 218.90
      No. 254 130.80 952.85
Reconciled balance $577.95 Reconciled balance $ 577.95

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 4–10. Carol Stokke receives her April 6 bank statement showing a balance of $859.75; her checkbook balance is $954.25. The bank
statement shows an ATM charge of $25.00, NSF fee of $27.00, earned interest of $2.75, and Carol’s $630.15 refund check,
which was processed by the IRS and deposited to her account. Carol has two checks that have not cleared—No. 115 for $521.15
and No. 116 for $205.50. There is also a deposit in transit for $1,402.05. Prepare Carol’s bank reconciliation.   LU 4-2(3)

Carol’s checkbook balance $ 954.25 Bank balance $ 859.75

  Add:   Add:
     Interest $ 2.75     Deposit in transit 1,402.05
    IRS refund 630.15 632.90 $2,261.80
$1,587.15
  Deduct:   Deduct:
     ATM card fee $ 25.00     Outstanding checks:
    NSF fee 27.00 52.00       No. 115 $521.15
      No. 116 205.50 726.65
Reconciled balance $1,535.15 Reconciled balance $1,535.15

4–11. Lowell Bank reported the following checking account fees: $2 to see a real-live teller, $20 to process a bounced check, and $1 to
$3 if you need an original check to prove you paid a bill or made a charitable contribution. This past month you had to transact
business through a teller six times—a total $12 cost to you. Your bank statement shows a $305.33 balance; your checkbook shows
a $1,009.76 balance. You received $1.10 in interest. An $801.15 deposit was not recorded on your statement. The following
checks were outstanding: No. 413, $28.30; No. 414, $18.60; and No. 418, $60.72. Prepare your bank reconciliation.  LU 4-2(3)

Your checkbook balance $1,009.76 Bank balance $ 305.33

  Add:   Add:
    Interest 1.10      Deposit in transit 801.15
$1,010.86 $1,106.48
  Deduct:   Deduct:
    Teller fee 12.00     Outstanding checks:
      No. 413 $28.30
      No. 414 18.60
      No. 418 60.72 107.62
Reconciled balance $  998.86 Reconciled balance $  998.86

4–12. According to the January 26, 2015, Portland Business Journal, Jim Houser, a Portland auto specialist, landed a key
Small Business Administration appointment. Help Jim reconcile Remington’s Auto Clinic’s checkbook and bank balance
according to the following: bank statement balance, $18,769; checkbook balance, $22,385,015; interest earned, $3,948;
deposits in transit, $100,656 and $22,375,000; ATM card fees, $150; outstanding checks—No. 10189, $55,678; No.
10192, $15,287; No. 10193, $22,350; and No. 10194, $12,297.   LU 4-2(3)

Remington’s checkbook balance $22,385,015 Bank balance $    18,769

  Add:   Add:
    Interest earned 3,948     Deposits in transit $  100,656
Copyright © 2017 by McGraw-Hill Education. All rights reserved.

$22,388,963 22,375,000 22,475,656

  Deduct: $22,494,425
    ATM card fee 150   Deduct:
    Outstanding checks:
      No. 10189 $55,678
      No. 10192 15,287
      No. 10193 22,350
      No. 10194 12,297 105,612
Reconciled balance $22,388,813 Reconciled balance $22,388,813

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 4–13. Identity Theft Resource Center (ITRC) provides consumer and victim support, public education, and advice. Marlena’s
grandmother is concerned her identity has been stolen. Help Marlena reconcile her grandmother’s checkbook and bank
statement. The checkbook reflects a balance of $1,245. The bank statement shows a balance of $207. Notes collected were
$100 and $210. The bank charged a $25 service fee. Outstanding checks were No. 255, $985; No. 261, $233; and No. 262,
$105. There is a deposit in transit of $2,646. Has the account been compromised?    LU 4-2(2)

Checkbook balance $1,245 Bank balance $  207

  Add:   Add:
    Notes collected $100      Deposit in transit 2,646
                  210 310 $2,853
$1,555   Deduct:
  Deduct:     Outstanding checks:
  Service fee 25       No. 255 $985
      No. 261 233
      No. 262 105 1,323
Reconciled balance $1,530 Reconciled balance $1,530

challenge problems

4–14. Carolyn Crosswell, who banks in New Jersey, wants to balance her checkbook, which shows a balance of $985.20. The
bank shows a balance of $1,430.33. The following transactions occurred: $135.20 automatic withdrawal to the gas com-
pany, $6.50 ATM fee, $8.00 service fee, and $1,030.05 direct deposit from the IRS. Carolyn used her debit card five
times and was charged 45 cents for each transaction; she was also charged $3.50 for check printing. A $931.08 deposit
was not shown on her bank statement. The following checks were outstanding: No. 235, $158.20; No. 237, $184.13; No.
238, $118.12; and No. 239, $38.83. Carolyn received $2.33 interest. Prepare Carolyn’s bank reconciliation.   LU 4-2(3)

Carolyn’s checkbook balance $ 985.20 Bank balance $1,430.33

  Add:   Add:
    Interest $   2.33     Deposit in transit 931.08
    IRS refund 1,030.05 1,032.38 $2,361.41
$2,017.58   Deduct:
  Deduct:     Outstanding checks:
    Gas company $  135.20       No. 235 $158.20
    ATM fee 6.50       No. 237 184.13
    Service fee 8.00       No. 238 118.12
    Debit (5 3 $.45) 2.25       No. 239 38.83 499.28
    Printing 3.50 155.45
Reconciled balance $1,862.13 Reconciled balance $1,862.13

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 4–15. Melissa Jackson, bookkeeper for Kinko Company, cannot prepare a bank reconciliation. From the following facts, can
you help her complete the June 30, 2015, reconciliation? The bank statement showed a $2,955.82 balance. Melissa’s
checkbook showed a $3,301.82 balance. Melissa placed a $510.19 deposit in the bank’s night depository on June 30.
The deposit did not appear on the bank statement. The bank included two DMs and one CM with the returned checks:
$690.65 DM for NSF check, $8.50 DM for service charges, and $400.00 CM (less $10 collection fee) for collecting
a $400.00 non-interest-bearing note. Check No. 811 for $110.94 and check No. 912 for $82.50, both written and
recorded on June 28, were not with the returned checks. The bookkeeper had correctly written check No. 884, $1,000,
for a new cash register, but she recorded the check as $1,069. The May bank reconciliation showed check No. 748 for
$210.90 and check No. 710 for $195.80 outstanding on April 30. The June bank statement included check No. 710 but
not check No. 748.   LU 4-2(3)

Kinko’s checkbook balance $3,301.82 Bank balance $2,955.82

  Add:   Add:
    Collection on notes     Deposit in transit 510.19
      receivable $400.00 $3,466.01
    Less:   Deduct:
      Collection fee 10.00 390.00     Outstanding checks:
    Error in recording       No. 748 $210.90
      check No. 884 69.00       No. 811 110.94
$3,760.82       No. 912 82.50 404.34
  Deduct:
    NSF check $690.65
    Service charge 8.50 699.15
Reconciled balance $3,061.67 Reconciled balance $3,061.67

summary practice test 

Do you need help? The videos in Connect have step-by-step worked-out solutions. These videos are also available on YouTube!
  1. Walgreens has a $12,925.55 beginning checkbook balance. Record the following transactions in the check stubs provided.
LU 4-1(2)
a.  November 4, 2015, check No. 180 payable to Ace Medical Corporation, $1,700.88 for drugs.
b.  $5,250 deposit—November 24.
c.  November 24, 2015, check No. 181 payable to John’s Wholesale, $825.55 merchandise.

180 1,700.88 181 825.55

November 4 15 November 24 15
Ace Medical John’s Wholesale
Drugs Merchandise
12,925 55 11,224 67
5,250 00
Copyright © 2017 by McGraw-Hill Education. All rights reserved.

12,925 55 16,474 67
1,700 88 825 55
11,224 67 15,649 12

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 2. On April 1, 2015, Lester Company received a bank statement that showed a balance of $8,950. Lester showed an $8,000
checking account balance. The bank did not return check No. 115 for $750 or check No. 118 for $370. A $900 deposit
made on March 31 was in transit. The bank charged Lester $20 for check printing and $250 for NSF checks. The bank
also ­collected a $1,400 note for Lester. Lester forgot to record a $400 withdrawal at the ATM. Prepare a bank reconcili-
ation.  LU 4-2(3)

LESTER COMPANY
Bank Reconciliation as of April 1, 2015

Checkbook balance Bank balance

Lester’s checkbook balance $8,000 Bank balance $8,950
  Add:   Add:
    Collection of note 1,400     Deposit in transit 3/31 900
$9,400 $9,850
  Deduct:   Deduct:
    Check printing $ 20     Outstanding checks:
    ATM 400       No. 115 $750
    NSF checks 250 670       No. 118 370 1,120
Reconciled balance $8,730 Reconciled balance $8,730

3. Felix Babic banks at Role Federal Bank. Today he received his March 31, 2015, bank statement showing a $762.80 balance.
Felix’s checkbook shows a balance of $799.80. The following checks have not cleared the bank: No. 140, $130.55; No. 149,
$66.80; and No. 161, $102.90. Felix made an $820.15 deposit that is not shown on the bank statement. He has his $617.30
monthly mortgage payment paid through the bank. His $1,100.20 IRS refund check was mailed to his bank. Prepare Felix
Babic’s bank reconciliation.  LU 4-2(3)

FELIX BABIC
Bank Reconciliation as of March 31, 2015

Checkbook balance Bank balance

Felix’s checkbook balance $  799.80 Bank balance $  762.80
  Add:   Add:
    IRS refund check 1,100.20     Deposit in transit 820.15
$1,900.00 $1,582.95
  Deduct:   Deduct:
    Automatic mortgage     Outstanding checks:
      withdrawal 617.30       No. 140 $130.55
      No. 149 66.80
      No. 161 102.90 300.25
Reconciled balance $1,282.70 Reconciled balance $1,282.70

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 4. On June 30, 2015, Wally Company’s bank statement showed a $7,500.10 bank balance. Wally has a beginning
­checkbook balance of $9,800.00. The bank statement also showed that it collected a $1,200.50 note for the company.
A $4,500.10 June 30 deposit was in transit. Check No. 119 for $650.20 and check No. 130 for $381.50 are outstand-
ing. Wally’s bank charges $.40 cents per check. This month, 80 checks were processed. Prepare a reconciled statement.  
LU 4-2(3)

WALLY COMPANY
Bank Reconciliation as of June 30, 2015

Checkbook balance Bank balance

Wally’s checkbook balance $ 9,800.00 Bank balance $ 7,500.10
  Add:   Add:
    Collection of note 1,200.50     Deposit in transit 6/30 4,500.10
$11,000.50 $12,000.20
  Deduct:   Deduct:
    Check charges (80 3 $.40) 32.00     Outstanding checks:
      No. 119 $650.20
      No. 130 381.50 1,031.70
Reconciled balance $10,968.50 Reconciled balance $10,968.50
Copyright © 2017 by McGraw-Hill Education. All rights reserved.

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