Question

The following data were accumulated for use in reconciling the bank account of Creative Design Co. for August 20Y6:

1. Cash balance according to the company's records at August 31, $16,760.
2. Cash balance according to the bank statement at August 31, $17,460.
3. Checks outstanding, $3,400.
4. Deposit in transit, not recorded by bank, $2,730.
5. A check for $340 in payment of an account was erroneously recorded in the check register as $430.
6. Bank debit memo for service charges, $60.

Required:
a. Prepare a bank reconciliation.
b. If the balance sheet were prepared for Creative Design Co. on August 31 what amount should be reported for cash?
c. Must a bank reconciliation always balance (reconcile)?

Answer 1

Part a

Creative Design Co.

Bank reconciliation as at August 31

Balance as per Bank Statement $17,460

Add Outstanding Checks $2,730

Less Unpresented Checks ($3,400)

Balance as per Cash Book $16,790

Part b

$16,790

Part c

Yes

Step-by-step explanation:

Creative Design Co.

Bank reconciliation as at August 31

Balance as per Bank Statement $17,460

Add Outstanding Checks $2,730

Less Unpresented Checks ($3,400)

Balance as per Cash Book $16,790