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 $17,880.
2. Cash balance according to the bank statement at July 31, $19,100.
3. Checks outstanding, $3,630.
4. Deposit in transit, not recorded by bank, $2,910.
5. A check for $170 in payment of an account was erroneously recorded in the check register as $710.
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	$
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

a) A bank reconciliation of Mathers Co. is as follows:

Mathers Co.

Bank reconciliation

   July 31

Particular	$
Cash balance according to the bank statement	19,100
Add: Deposit in transit, not recorded by bank	2,910
Deduct: Outstanding checks	(3,630)
Adjusted Balance	$18,380
Cash balance according to the company's records	17,880
Add: Error in recording amount of check ($710 - $170)	540
Deduct: Bank service charges paid	(40)
Adjusted Balance	$18,380

b) $18,380 is adjusted balance got from bank reconciliation statement should be reported for cash in the balance sheet of Mathers Co. as on July 31.

c) Yes,bank reconciliation must be balanced(reconciled) to get adjusted balance at the end of the period.