Bank Reconciliation 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, $16,290. Cash balance according to the bank statement at August 31, $17,260. Checks outstanding, $3,310. Deposit in transit, not recorded by bank, $2,660. A check for $480 in payment of an account was erroneously recorded in the check register as $840. Bank debit memo for service charges, $40. 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 $ Add: Deposit in transit on August 31 $ Deduct: Outstanding checks Adjusted balance $ Cash balance according to company's records $ Add: Error in recording check Deduct: Bank service charge Adjusted balance $ Feedback 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?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Bank Reconciliation

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, $16,290.
Cash balance according to the bank statement at August 31, $17,260.
Checks outstanding, $3,310.
Deposit in transit, not recorded by bank, $2,660.
A check for $480 in payment of an account was erroneously recorded in the check register as $840.
Bank debit memo for service charges, $40.

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		$
Add: Deposit in transit on August 31	$
Deduct: Outstanding checks
Adjusted balance		$
Cash balance according to company's records		$
Add: Error in recording check
Deduct: Bank service charge
Adjusted balance		$

Feedback

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

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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