Bank reconciliation

The following data were accumulated for use in reconciling the bank account of Creative Design Co$.$ for August $20$Y$6$:

Cash balance according to the company's records at August $31,$$$15,570.$

Cash balance according to the bank statement at August $31,$$$16,680.$

Checks outstanding, $$3,160.$

Deposit in transit not recorded by bank, $$2,540.$

A check for $$170$ in payment of an account was erroneously recorded in the check register as $$710.$

Bank debit memo for service charges, $$50.$

a$.$ Prepare a bank reconciliation, using the format shown in Exhibit $13.$

Creative Design Co$.$

Bank Reconciliation

August $31,20Y6$

Line Item Description

Cash balance according to bank statement

Add: Deposit in transit on Auqust $31$

Deduct: Outstanding checks $*$

Adjusted balance

Cash balance according to company's records

Add: Error in recording check $$

Deduct: Bank service charqe $*$

Adjusted balance

Amount

Ch $7$ Homework

Deduct: Outstandina checks $$

Adjusted balance

Cash balance according to company's records

Add: Error in recording check $$

Deduct: Bank service charge $$

Adjusted balance

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TCheck My Work

a$.$ Set up two sections: one for the company cash account section and the other for the bank balance section. Determine the effect of the data on each section. Recall that when you are finished, the adjusted balances in the bank and company sections of the reconciliation must be equal. If not, an item has been overlooked or treated in error.

b$.$ If the balance sheet were prepared for Creative Design Co$.$ on August $31,$ what amount should be reported for cash?

$

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

Yes: $$