Question

The following data were accumulated for use in reconciling the bank account of Creative Design Co. for August 20Y6:

1.	Cash balance according to the company’s records at August 31, $20,014.
2.	Cash balance according to the bank statement at August 31, $28,514.
3.	Checks outstanding, $14,232.
4.	Deposit in transit, not recorded by bank, $6,214.
5.	A check for $55 in payment of an account was erroneously recorded in the check register as $550.
6.	Bank debit memo for service charges, $13.

A.	Prepare a bank reconciliation, using the format shown in Exhibit 13 . Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. For those boxes in which you must enter subtracted or negative numbers use a minus sign.
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)?

Amount Descriptions
Adjusted balance
Bank service charge
Bank error in charging check as $55 instead of $550
Bank error in charging check as $550 instead of $55
Deposit in transit, not recorded by bank
Error in recording check as $55 instead of $550
Error in recording check as $550 instead of $55
Outstanding checks
Total adjustments

A. Prepare a bank reconciliation, using the format shown in Exhibit 13. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

Creative Design Co.

Bank Reconciliation

August 31, 20Y6

1	Cash balance according to bank statement
2	Adjustments:
3
4
5
6
7
8	Cash balance according to company’s records
9	Adjustments:
10
11
12
13

Final Questions

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)?

No

Yes

Answer 1

Answer
Answer A.
CREATIVE DESIGN CO
Bank Recocilation
Aug 31, 20Y6
Bank's Cash Balance			Company's Cash Balance
Per Bank Statement		$        28,514	Per General Ledger	$     20,014
Add:			Add:
Deposit in transit		$          6,214	Error in recording check ($550 -$55)	$          495
		$        34,728		$     20,509
Less:			Less:
Outstanding Checks:		-$        14,232	Bank Charges	-$            13
Bank Balance after Reconcilation		$        20,496	Company Balance per Reconcilation	$     20,496
				-
Answer B.
Amount Reported in Balance Sheet	20496
Answer C.
Yes - bank reconciliation must always balanced (reconciled ) to get an adjusted cash balance at the end of the specifc period.