Diamond Corp. prepares monthly bank reconciliations of its checking account balance. The bank statement for October 2019 indicated the following:

Balance, October 31, 2019$29,700
Bank service charges for October80
Interest earned during October120
NSF Check from a customer which had been previously deposited by Diamond230
Collection of note ($4,000) and the related interest ($100) from Diamond's      customer4,100
An analysis of canceled checks and deposits and the records of Diamond revealed the following items:
Checking account balance per Diamond's accounting records$26,040
Outstanding checks as of October 312,950
Deposits in transit on October 313,110
Error in recording check # 627 issued by Diamond90
The correct amount of check # 627 is $980, but it was recorded as a cash disbursement of $890. The check was issued to pay for merchandise purchased. The check was written correctly and appeared on the bank statement correctly.
A)Prepare a bank reconciliation in proper form for October 31, 2019.  B)What amount would Diamond report its cash balance on its October 31, 2019, balance sheet?

What will be an ideal response?

?

A)Diamond Corp. Bank Reconciliation October 31, 2019 Cash balance from the bank statement$29,700 Add: deposits in transit3,110 Less: outstanding checks  (2,950) Adjusted cash balance$29,860    Cash balance from company records$26,040 Add: interest earned120 Add: note and interest collected by the bank4100 Less: NSF check(230) Less: bank service charges(80) Less: correction of error        (90) Adjusted cash balance$29,860   B)$29,860 

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