EX 8-18 Bank reconciliation The following data were accumulated for use in recon

Question

EX 8-18 Bank reconciliation The following data were accumulated for use in reconciling the bank account of Mathers Co. for July: 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. 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)?

Explanation / Answer

1 Mathers Company Bank Reconciliation May 31 2 Cash balance according to bank statement 31350 4 Add deposit in transit, not recorded by bank 4150 35500 3 Deduct outstanding checks 2870 Adjusted balance 32630 1 Cash balance according to company's records 32110 5 Add error in recording check 540 32650 6 Deduct bank service charge 20 Adjusted balance 32630 2 32630 3 Yes

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