Question

Bank Reconciliation

The following data were accumulated for use in reconciling the bank account of Creative Design Co. for August 20Y6:

1. Cash balance according to the company’s records at August 31, $42,920.
2. Cash balance according to the bank statement at August 31, $56,300.
3. Checks outstanding, $25,390.
4. Deposit in transit not recorded by bank, $13,325.
5. A check for $150 in payment of an account was erroneously recorded in the check register as $1,500.
6. Bank debit memo for service charges, $35.

a. Prepare a bank reconciliation, using the format shown in Exhibit 13.

Creative Design Co.
Bank Reconciliation
August 31, 20Y6
Cash balance according to bank statement		$
Adjusted balance		$
Cash balance according to company's records		$
Adjusted balance		$

b. If the balance sheet were prepared for Creative Design Co. on August 31, what amount should be reported for cash?
$

c. Must a bank reconciliation always balance (reconcile)?

Answer 1

Solution a:

yk AR Creative design co. Bank Reconciliation Aug-31 Cash balance according to Bank Statement |Add: Deposit in transit, not recorded by Bank $56,300 $13,325 $69,625 $25,390 $44,235 Deduct: Outstanding checks Adjusted Balance Cash balance according to Company's books Add: Error in recording check as 1500 instead of 150 14 $42,920 $1,350 $44,270 $35 $44,235 16 17 Deduct: Bank Service Charges Adjusted Balance 21 22 23 24 25 27 28 29 30 32 34 35 38 39 40 42 43 et230 Sheet136 Sheet36 (29) Sheet259 Sheet36 (30)

Solution b:

Cash balance to be reported = $44,235

Solution c:

Yes, a bank reconciliation must always reconcile.