Kat Bardash, a student at a small state college, has just received her first checking account statement for the month ended September 30. This is her first chance to attempt bank reconciliation. The bank's statement of account shows the following information:
Bank balance, September 1 $1,150
Deposits during September 650
Checks cleared during September 900
Bank service charge 25
Interest earned 5
Bank balance, September 30 880
Kat is surprised that her bank has not yet reported the $50 deposit that she made on September 29 and pleased that her $200 rent check has not yet cleared her account. Her September 30 checkbook balance is $750.
1. Complete Kat's bank reconciliation. What adjustments, if any, does she need to make in her checkbook?
2. Why is it important for individuals and businesses to prepare bank reconciliation each month?