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, $27,900.
2. Cash balance according to the bank statement at July 31, $29,330.
3. Checks outstanding, $5,660.
4. Deposit in transit, not recorded by bank, $4,550.
5. A check for $480 issued in payment of an account was erroneously recorded in the check register as $840.
6. Bank debit memo for service charges, $40.

Question Content Area

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

Cash balance according to bank statement
Add bank service chargeAdd deposit in transit, not recorded by bankAdd error in recording check $840 instead of $480Add outstanding checksDeduct deposit in transit, not recorded by bank
Add error in recording checkDeduct bank service chargeDeduct deposit in transit, not recorded by bankDeduct error in recording checkDeduct outstanding checks
Adjusted balance
Cash balance according to company's records
Add bank service chargeAdd deposit in transit, not recorded by bankAdd error in recording check $840 instead of $480Add outstanding checksDeduct deposit in transit, not recorded by bank
Add outstanding checksDeduct bank service chargeDeduct deposit in transit, not recorded by bankDedcut error in recording checkDeduct outstanding checks
Adjusted balance

Question Content Area

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

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

YesNo