Question

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 $20,530. Cash balance according to the bank statement at July 31, $21,850. Checks outstanding, $4,170. Deposit in transit, not recorded by bank, $3,350. A check for $170 in payment of an account was erroneously recorded in the check register as $710. Bank debit memo for service charges, $40. 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

1	Mathers Co
	Bank Reconciliation
	Cash Balance According to Bank Statement	$21,850
	Add: Deposit in transit	$3,350
		$25,200
	Less: Outstanding checks	$4,170
	Adjusted Balance per bank	$21,030
	Cash Balance According to Company's records	$20,530
	Add: Error	$540
		$21,070
	Less: Bank service charges	$40
	Adjusted Balance per company's records	$21,030
2	The amount should be reported for cash $21,030
3	Yes, The bank reconciliation must always balance (reconcile) to
	an adjusted balance.