Question

Bank Reconciliation

An accounting clerk for Chesner Co. prepared the following bank reconciliation:

Chesner Co.
Bank Reconciliation
August 31
Cash balance according to company's records			$6,400
Add: Outstanding checks	$3,070
Error by Chesner Co. in recording Check
No. 1056 as $940 instead of $490	450
Note for $10,000 collected by bank, including interest	10,400		13,920
			$20,320
Deduct: Deposit in transit on August 31	$6,520
Bank service charges	30		6,550
Cash balance according to bank statement			$13,770

a. From the data in this bank reconciliation, prepare a new bank reconciliation for Chesner Co., using the format shown in the illustrative problem.

b. If a balance sheet were prepared for Muskegon Co. on May 31, 2016, what amount should be reported for cash?

Answer 1

a
Chesner Co.
Bank Reconciliation
August 31
Cash balance according to bank statement		13770
Add deposit in transit on August 31		6520
Deduct outstanding checks		3070
Adjusted balance		17220
Cash balance according to company's records		6400
Add error in recording Check No. 1056 as $940 instead of $490	450
Add Note for $10,000 collected by bank, including interest	10400	10850
Deduct bank service charges		30
Adjusted balance		17220
b
Amount reported for cash = 17220