Bank Reconciliation Exam Success: 40 Practice Questions with
Complete Solutions + Journal Entries | Basic to Advance with
Overdrafts
SECTION A: SINGLE ITEM RECONCILIATIONS (Questions 1-10)
Outstanding checks only, deposits in transit only
Bank charges, NSF checks, interest earned
Bank errors, company errors, special transactions
SECTION B: TWO-ITEM RECONCILIATIONS (Questions 11-20)
Combined timing and recording differences
Multiple outstanding items
Various fee combinations
SECTION C: MULTI-ITEM RECONCILIATIONS (Questions 21-30)
Three or more reconciling items
Complex error combinations
Comprehensive scenarios
SECTION D: OVERDRAFT AND SPECIAL SITUATIONS (Questions 31-40)
Simple and complex overdrafts
Overdraft protection and recovery
Special banking situations
SECTION A: SINGLE ITEM RECONCILIATIONS (Questions 1-10)
Question 1: Outstanding Checks Only
Scenario: Smart Corp's cash book shows $18,500 on December 31st. The bank statement shows
$22,800. The difference is entirely due to outstanding checks.
What's Happening: The company wrote checks and recorded them in their cash book (reducing
the cash balance), but these checks haven't reached the bank yet, so the bank balance is higher
than the book balance.
,Solution:
SMART CORP - BANK RECONCILIATION STATEMENT Amount
BANK STATEMENT SIDE
Bank Statement Balance $22,800
Add: Deposits in Transit $0
Less: Outstanding Checks ($4,300)
Adjusted Bank Balance $18,500
CASH BOOK SIDE
Cash Book Balance $18,500
Add: Bank Collections/Interest $0
Less: Bank Charges/NSF Checks $0
Adjusted Cash Book Balance $18,500
Explanation: Outstanding checks of $4,300 ($22,800 - $18,500) reduce the bank balance to
match the cash book. No journal entries are needed since this is a timing difference.
Journal Entries: None required.
Question 2: Deposits in Transit Only
Scenario: Tech Solutions deposited $6,200 after banking hours on March 31st. Their cash book
shows $34,700, while the bank statement shows $28,500.
What's Happening: The company made a deposit and recorded it in their books immediately,
but since it was after banking hours, the bank will process it on the next business day, creating a
timing difference.
,Solution:
TECH SOLUTIONS - BANK RECONCILIATION STATEMENT Amount
BANK STATEMENT SIDE
Bank Statement Balance $28,500
Add: Deposits in Transit $6,200
Less: Outstanding Checks $0
Adjusted Bank Balance $34,700
CASH BOOK SIDE
Cash Book Balance $34,700
Add: Bank Collections/Interest $0
Less: Bank Charges/NSF Checks $0
Adjusted Cash Book Balance $34,700
Explanation: The deposit in transit of $6,200 increases the bank balance to match the cash book
balance. This is a timing difference requiring no journal entry.
Journal Entries: None required.
Question 3: Bank Service Charges Only
Scenario: Quick Print's cash book balance is $41,250. The bank statement shows $40,975. The
bank charged $275 in monthly service fees that the company hasn't recorded.
What's Happening: The bank automatically deducted service charges from the account, but the
company hasn't been notified yet and hasn't recorded this expense in their books.
, Solution:
QUICK PRINT - BANK RECONCILIATION STATEMENT Amount
BANK STATEMENT SIDE
Bank Statement Balance $40,975
Add: Deposits in Transit $0
Less: Outstanding Checks $0
Adjusted Bank Balance $40,975
CASH BOOK SIDE
Cash Book Balance $41,250
Add: Bank Collections/Interest $0
Less: Bank Service Charges ($275)
Adjusted Cash Book Balance $40,975
Explanation: The bank service charges reduce the cash book balance to match the bank
statement. The company must record this expense.
Journal Entries:
Date Account Debit Credit
Mar 31 Bank Service Charges Expense $275
Cash $275
Question 4: NSF Check Only
Scenario: Metro Sales received a $3,800 check from customer Johnson. The check was
deposited and recorded, but the bank returned it marked "NSF" (Non-Sufficient Funds). Cash
book: $45,600, Bank statement: $41,800.
Complete Solutions + Journal Entries | Basic to Advance with
Overdrafts
SECTION A: SINGLE ITEM RECONCILIATIONS (Questions 1-10)
Outstanding checks only, deposits in transit only
Bank charges, NSF checks, interest earned
Bank errors, company errors, special transactions
SECTION B: TWO-ITEM RECONCILIATIONS (Questions 11-20)
Combined timing and recording differences
Multiple outstanding items
Various fee combinations
SECTION C: MULTI-ITEM RECONCILIATIONS (Questions 21-30)
Three or more reconciling items
Complex error combinations
Comprehensive scenarios
SECTION D: OVERDRAFT AND SPECIAL SITUATIONS (Questions 31-40)
Simple and complex overdrafts
Overdraft protection and recovery
Special banking situations
SECTION A: SINGLE ITEM RECONCILIATIONS (Questions 1-10)
Question 1: Outstanding Checks Only
Scenario: Smart Corp's cash book shows $18,500 on December 31st. The bank statement shows
$22,800. The difference is entirely due to outstanding checks.
What's Happening: The company wrote checks and recorded them in their cash book (reducing
the cash balance), but these checks haven't reached the bank yet, so the bank balance is higher
than the book balance.
,Solution:
SMART CORP - BANK RECONCILIATION STATEMENT Amount
BANK STATEMENT SIDE
Bank Statement Balance $22,800
Add: Deposits in Transit $0
Less: Outstanding Checks ($4,300)
Adjusted Bank Balance $18,500
CASH BOOK SIDE
Cash Book Balance $18,500
Add: Bank Collections/Interest $0
Less: Bank Charges/NSF Checks $0
Adjusted Cash Book Balance $18,500
Explanation: Outstanding checks of $4,300 ($22,800 - $18,500) reduce the bank balance to
match the cash book. No journal entries are needed since this is a timing difference.
Journal Entries: None required.
Question 2: Deposits in Transit Only
Scenario: Tech Solutions deposited $6,200 after banking hours on March 31st. Their cash book
shows $34,700, while the bank statement shows $28,500.
What's Happening: The company made a deposit and recorded it in their books immediately,
but since it was after banking hours, the bank will process it on the next business day, creating a
timing difference.
,Solution:
TECH SOLUTIONS - BANK RECONCILIATION STATEMENT Amount
BANK STATEMENT SIDE
Bank Statement Balance $28,500
Add: Deposits in Transit $6,200
Less: Outstanding Checks $0
Adjusted Bank Balance $34,700
CASH BOOK SIDE
Cash Book Balance $34,700
Add: Bank Collections/Interest $0
Less: Bank Charges/NSF Checks $0
Adjusted Cash Book Balance $34,700
Explanation: The deposit in transit of $6,200 increases the bank balance to match the cash book
balance. This is a timing difference requiring no journal entry.
Journal Entries: None required.
Question 3: Bank Service Charges Only
Scenario: Quick Print's cash book balance is $41,250. The bank statement shows $40,975. The
bank charged $275 in monthly service fees that the company hasn't recorded.
What's Happening: The bank automatically deducted service charges from the account, but the
company hasn't been notified yet and hasn't recorded this expense in their books.
, Solution:
QUICK PRINT - BANK RECONCILIATION STATEMENT Amount
BANK STATEMENT SIDE
Bank Statement Balance $40,975
Add: Deposits in Transit $0
Less: Outstanding Checks $0
Adjusted Bank Balance $40,975
CASH BOOK SIDE
Cash Book Balance $41,250
Add: Bank Collections/Interest $0
Less: Bank Service Charges ($275)
Adjusted Cash Book Balance $40,975
Explanation: The bank service charges reduce the cash book balance to match the bank
statement. The company must record this expense.
Journal Entries:
Date Account Debit Credit
Mar 31 Bank Service Charges Expense $275
Cash $275
Question 4: NSF Check Only
Scenario: Metro Sales received a $3,800 check from customer Johnson. The check was
deposited and recorded, but the bank returned it marked "NSF" (Non-Sufficient Funds). Cash
book: $45,600, Bank statement: $41,800.
