The following data were accumulated for use in reconciling the bank account of Mathers Co. forJuly:
1. Cash balance according to the company's 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.
Instructions
a. Prepare a bank reconciliation.
Answer: Cash balance according to bank statement 31,350
Add deposit in transit, not recorded by bank 4,150
Deduct outstanding checks 2,870
Adjusted balance 32,630.
Cash balance according to company's records 32,110
Add error in recording check as $710 instead of $170 540
Deduct bank service charge 20
Adjusted balance 32,630
b. If the balance sheet is prepared for Mathers Co. on July 31, what amount should be reported for cash?
Answer: $32,630
c. Must a bank reconciliation always balance (reconcile)?
Answer: Yes.
