Question

Bank Reconciliation The following data were accumulated for use in reconciling the bank account of Mathers Co. for July: Cash balance according to the company's records at July 31 $14,720. Cash balance according to the bank statement at July 31, $15,730. Checks outstanding, $2,990. Deposit in transit, not recorded by bank, $2,400. A check for $270 in payment of an account was erroneously recorded in the check register as $720. Bank debit memo for service charges, $30. a. Prepare a bank reconciliation, using the format shown in Exhibit 14. Mathers Co. Bank Reconciliation July 31 Cash balance according to bank statement $ Adjusted balance $ Cash balance according to company's records $ Adjusted balance $ b. If the balance sheet is prepared for Mathers Co. on July 31, what amount should be reported for cash? $ c. Must a bank reconciliation always balance (reconcile)?

Answer 1

a)

Bank Reconciliation

Bank		Books
Cash balance according to bank statement	15,730	Cash balance according to company's records	14,720
Add:		Add:
Deposit in transit	2,400	Correction of book error	450
Less:		Less:
Outstanding checks	- 2,990	Bank service charges	- 30
Adjusted bank balance	$15,140	Adjusted book balance	$15,140

b)

Cash balance to be reported = $15,140

c)

A bank reconciliation must always balance.

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