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

1. Cash balance according to the company's records at July 31, $15,080.
2. Cash balance according to the bank statement at July 31, $16,010.
3. Checks outstanding, $3,060.
4. Deposit in transit, not recorded by bank, $2,460.
5. A check for $590 issued in payment of an account was erroneously recorded in the check register as $950.
6. Bank debit memo for service charges, $30.

a. Prepare a bank reconciliation, using the format shown in Exhibit 12.

Nakajima Co.
Bank Reconciliation
July 31
Cash balance according to bank statement	$fill in the blanks
Add deposit in transit, not recorded by bank
Deduct outstanding checks
Adjusted balance
Cash balance according to company's records
Add error in recording check $950 instead of $590
Deduct bank service charge
Adjusted balance

Feedback

a. Set up two columns: one for the company cash account section and the other for the bank balance section. Determine the effect of the data on each column. 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 is prepared for Nakajima Co. on July 31, what amount should be reported for cash? $fill in the blank

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