The following data were accumulated for use in reconciling the bank account for

Question

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

1.Cash balance according to the company's records at July 31, $15,600

2. Cash balance according to the bank statement at July 31, $16,230

3.Checks outstanding $3,180.

4. Deposit in transit, not recorded by bank, $2,950

5. A check for $270 in payment of an account was erroneously recorded in the check register as $720.

6. Bank debit memo for service charges $50.

a. Prepare a bank reconciliation, using the format shown in Exhibit 7.

b. If the balance sheet were prepared for Maplewood Co. on July 31, what amount should be reported for cash?

c. Must a bank reconciliation always balance (reconcile)?

Explanation / Answer

a) Bank Reconciliation Statement M Company Bank Reconciliation Statement For the period of July Balance as per stateent $16,230 Add: Deposit in transit, not recorded by bank $2,950 $2,950 $19,180 Deduct: Outstanding check $3,180 $3,180 Correct cash balance $16,000 Balance as per book $15,600 Add: Error in recording check ($720 - $270) $450 $450 $16,050 Deduct: Bank service charges for debit memo 50 50 Correct cash balance $16,000 b) If the balance sheet were prepared for M Company on July 31 the reported cash balance is $16,000 c)After the errors rectified then bank reconciliation always balance.

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