Question

The following data were accumulated for use in reconciling the bank account of Creative Design Co. for August 20Y6: Cash balance according to the company's records at August 31, $17,350. Cash balance according to the bank statement at August 31, $18,340. Checks outstanding, $3,520. Deposit in transit, not recorded by bank, $2,830. A check for $590 in payment of an account was erroneously recorded in the check register as $950. Bank debit memo for service charges, $60. a. Prepare a bank reconciliation, using the format shown in Exhibit 13. Creative Design Co. Bank Reconciliation August 31, 20Y6 Cash balance according to bank statement $ Adjustments: Deposit in transit, not recorded by bank Outstanding checks Total adjustments Adjusted balance $ Cash balance according to company's records $ Adjustments: Error in recording check $ Bank service charge Total adjustments Adjusted balance $ Feedback b. If the balance sheet were prepared for Creative Design Co. on August 31, 2016, what amount should be reported for cash? $

Answer 1

Answer:

A)

Bank reconciliation:

Bank balance Augusts 31                    $18,340

+ Deposits in transit                              $2,830

- Outstanding checks                           $3,520

Reconciled bank account                   $17,650

Cash balance reconciliation:

Cash balance August 31                     $17,350

+ Error in recording check                      $360

- Bank fees                                                 $60

Reconciled cash account                   $17,650

B) Cash account balance $17,650