Final answer:
When unable to reconcile bank and cash balances with no apparent cause, the difference should be reported as a reconciling item. An in-depth reconciliation should be performed to identify potential errors or timing differences.
Step-by-step explanation:
When the Klein Company's accountant is unable to reconcile the bank and cash account balances, and no cause for the discrepancy can be found, the difference should be recorded in the financial statements as a reconciling item. A reconciliation should be prepared where both the bank and cash records are compared item by item to identify any timing differences or errors.
Examples of reconciling items include outstanding checks, deposits in transit, bank fees, or errors in recording transactions. If a careful investigation doesn't reveal any errors or timing differences, the remaining difference might suggest the possibility of fraud or mismanagement, which would need to be investigated by the company.