Question

Using the following information:

(a)	The bank statement balance is $3,083.
(b)	The cash account balance is $3,100.
(c)	Outstanding checks amounted to $765.
(d)	Deposits in transit are $700.
(e)	The bank service charge is $73.
(f)	A check for $77 for supplies was recorded as $68 in the ledger.

Required:

Prepare a bank reconciliation for Miller Co. for August 31. Be sure to complete the statement heading. Refer to the Labels and Amount Descriptions provided for the exact wording of the answer choices for text entries. “Deduct” or “Add” will automatically appear if it is required. Enter all amounts as positive values.

Labels and Amount Descriptions

Labels
August 31
Amount Descriptions
Bank service charge
Deposits in transit not recorded by bank
Error in recording
Outstanding checks

Answer 1

bank reconciliation is prepared to give effect to transactions that may have not been recorded due to its nature.

it reconciles cash balance as per books and bank.

Miller Co.			explanation
Bank reconciliation
Cash balance as per bank statement		$3,083
Add:deposits in transit not recorded by bank		$700	recorded in books but in bank this balance is not yet available so we will add it.
		$3,783[3083+700]
less: outstanding checks		-$765	recorded in books but not yet presented in bank so we will deduct it.
Adjusted balance		$3,018
cash balance as per company's book		$3,100
Less: bank service charge	$73
error in recording($77-$68)	$9	$82	charges will be deducted as it will reduce cash balance
Adjusted balance		$3,018

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