Suzie has not reconciled the company\'s cash balance with that of the bank since

Question

Suzie has not reconciled the company's cash balance with that of the bank since the company was started. She asks summit Bank to provide her with a six-month bank statement. To save time, Suzie makes deposits at the bank only on the first day of each month.

After comparing the two balances, Suzie has some concern because the bank's balance of $50,500 is substantially less than the company's balance of $64,200.

Required:

How did failure to reconcile the bank statement affect the reported amounts for assets, liabilities, stockholders' equity, revenues, and expenses?

Explanation / Answer

By not reconciling a bank statement, you may fail to detect errors that the bank made to the company's account or that the company did not record properly. For instance, the company recorded the wrong amount for a check, the assets and expenses are incorrect. Susie recorded a deposit incorrectly, the assets and income will be incorrect.

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