Question

Bank Reconciliation The following data were accumulated for use in reconciling the bank account of Mathers Co. for July: 1. Cash balance according to the company's records at July 31 $17,490. 2. Cash balance according to the bank statement at July 31, $18,520. 3. Checks outstanding, $3,550. 4. Deposit in transit, not recorded by bank, $2,850. 5. A check for $590 in payment of an account was erroneously recorded in the check register as $950. 6. 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 $1 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

Answer a. Mathers Co. Bank Reconciliation July 31 Cash balance according to bank statement Add: Deposit in transit Less: Checks outstanding Adjusted balance 18,520 2,850 3,550 17,820 $ 17,490 Cash balance according to company's records Add: Error in recording Less: Bank service charge Adjusted balance 30 17,820 Answer b. Cash balance on July 31 balance sheet is $17,820 Answer c. Yes, balance as per bank statement must equals to balance as per books.