Question

The following data were accumulated for use in reconciling the bank account of Mathers Co. for July:

1. Cash balance according to the companyâs records at July 31, $32,110.
2. Cash balance according to the bank statement at July 31, $31,350.
3. Checks outstanding, $2,870.
4. Deposit in transit, not recorded by bank, $4,150.
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, $20.
a. Prepare a bank reconciliation, using the format shown in Exhibit 13.
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). Bank Reconciliation

Particulars Amount ($)

Cash balance according to bank statement 31,350

Add : Deposit in transit 4,150

Less : Outstanding check - 2,870

Adjusted balance 32,630

Cash balance as Co. record 32,110

Add : error in check (710-170) 540

Less : Bank charges -20

Adjusted balance 32,630

b). Amount reported = $ 32,630

c). Yes, the reconciliation of a bank must be always balance.