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 $22,680. 2. Cash balance according to the bank statement at July 31, $23,890. 3. Checks outstanding, $4,600. 4. Deposit in transit, not recorded by bank, $3,700. 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, $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 $ 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

Solution a:

28 IR AR 30 32 33 34 35 36 37 38 Mathers Co. Bank Reconciliation Jul-31 Cash balance according to Bank Statement Add: deposit in transit Deduct: Outstanding checks Adjusted Balance $23,890 $3,700 $4,600 $22,990 41 44 $22,680 $360 Cash balance according to Company's books Add: Error in recording check for $590 as $950 Deduct: Bank Service Charges Adjusted Balance $50 $22,990 52 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 106 (13) ) Sheet229 Sheet230 Sheet136 Sheet36 (29)

Solution b:

Cash balance to be reported = $22,990

Solution c:

Yes, a bank reconciliation must always balance (reconcile).