Question

1. 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 $28,850.
   2. Cash balance according to the bank statement at July 31, $30,060.
   3. Checks outstanding, $5,860.
   4. Deposit in transit, not recorded by bank, $4,700.
   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, $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	$
   Add deposit in transit, not recorded by bank
   Deduct outstanding checks
   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)?
   Yes

Answer 1

a
Mathers Co.
Bank Reconciliation
July 31
Cash balance according to bank statement	30060
Add deposit in transit, not recorded by bank	4700
Deduct outstanding checks	5860
Adjusted balance	28900
Cash balance according to company's records	28850
Add error in recording check $430 instead of $340	90
Deduct bank service charge	40
Adjusted balance	28900
b
Cash to be reported	28900
c
Yes, a bank reconciliation must always balance
Note: Deduct amount can alternatively be written with a minus sign