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 $22,020.
2. Cash balance according to the bank statement at July 31, $22,940.
3. Checks outstanding, $4,470.
4. Deposit in transit, not recorded by bank, $3,590.
5. A check for $340 in payment of an account was erroneously recorded in the check register as $430.
6. Bank debit memo for service charges, $50.

a. Prepare a bank reconciliation, using the format shown in Exhibit 14.

Mathers Co.
Bank Reconciliation
July 31
Cash balance according to bank statement	$
Add deposit in transit, not recorded by bank
Deduct bank service charge
Adjusted balance	$
Cash balance according to company's records	$
Add error in recording check $430 instead of $340
Deduct bank service charge
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

Mathers Co.
Bank Reconciliation
July 31
Cash balance according to bank statement	$22,940
Add: deposit in transit, not recorded by bank	$3,590
Deduct: Outstanding checks	$4,470
Adjusted balance	$22,060
Cash balance according to company’s records	$22,020
Add: Error in recording check $430 instead of $340         [$430 - $340]	$90
Deduct: Bank service charges	$50
Adjusted balance	$22,060
b. If the balance sheet is prepared for Mathers Co. on July 31, what amount should be reported for cash?	$22,060
c. Must a bank reconciliation always balance (reconcile)?	Yes