Question

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

Answer 1

Answer:

See explanation for all the requirements.

Explanation:

Requirement A

                                Mathers Co.

                        Bank Reconciliation

                                   July 31

Cash balance according to bank statement           $ 24,000

Add: deposit in transit                                                 $3,680

Deduct: outstanding checks                                        (4,590)

Adjusted balance                                                      $23,090

Cash balance according to company's records       $22,600

Add: Error in records payments (710-170)                       $540

Less: Bank charge                                                            ($50)

Adjusted balance                                                       $23,090

Requirement B and C

B. If the balance sheet is prepared for Mathers Co. on July 31, $23,090 should be reported for cash.

C. It is a necessary procedure for a bank and an individual or an organization to adjust the bank balance and book balance to avoid any kind of errors. Therefore, reconciliation is always significant. A bank must always do a reconciliation.