FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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![**Bank Reconciliation for Miller Co. - August 31**
**Using the following information:**
1. The bank statement balance is $3,322.
2. The cash account balance is $3,424.
3. Outstanding checks amounted to $693.
4. Deposits in transit are $735.
5. The bank service charge is $51.
6. A check for $75 for supplies was recorded as $66 in the ledger.
**Prepare a bank reconciliation for Miller Co. for August 31.**
**Miller Co.**
**Bank Reconciliation**
**August 31**
**Cash balance according to bank statement**
\[ 3,322 \]
**Add: Deposits in transit**
\[ +735 \]
**Less: Outstanding checks**
\[ -693 \]
**Adjusted balance:**
\[ 3,364 \]
**Cash balance according to company’s records**
\[ 3,424 \]
**Less: Bank service charge**
\[ -51 \]
**Less: Error in recording check**
\[ -9 \]
**Adjusted balance:**
\[ 3,364 \]
**Detailed Explanation of Adjustments:**
1. **Deposits in transit** are amounts deposited but not yet recorded by the bank. They are added to the bank balance.
2. **Outstanding checks** are checks written by the company that have not yet cleared the bank. They are deducted from the bank balance.
3. **Bank service charge** is deducted from the company’s ledger balance because it is an expense not yet recorded.
4. **Error in recording the check**: The check was recorded as $66 instead of $75, leading to a $9 error. This amount must be deducted from the ledger balance to correct the error.
In the process of bank reconciliation, the goal is to reconcile the differences between the company's records and the bank statement to ensure that the ending balances match. This includes adjustments for any transactions not yet recorded in either the ledger or the bank statement.](https://content.bartleby.com/qna-images/question/5184b454-ac1c-4a60-9c8b-4e8812099cb7/aca36d18-6eb6-4d60-ae0f-1201f3c4b7d9/pe2xku8_processed.jpeg)
Transcribed Image Text:**Bank Reconciliation for Miller Co. - August 31**
**Using the following information:**
1. The bank statement balance is $3,322.
2. The cash account balance is $3,424.
3. Outstanding checks amounted to $693.
4. Deposits in transit are $735.
5. The bank service charge is $51.
6. A check for $75 for supplies was recorded as $66 in the ledger.
**Prepare a bank reconciliation for Miller Co. for August 31.**
**Miller Co.**
**Bank Reconciliation**
**August 31**
**Cash balance according to bank statement**
\[ 3,322 \]
**Add: Deposits in transit**
\[ +735 \]
**Less: Outstanding checks**
\[ -693 \]
**Adjusted balance:**
\[ 3,364 \]
**Cash balance according to company’s records**
\[ 3,424 \]
**Less: Bank service charge**
\[ -51 \]
**Less: Error in recording check**
\[ -9 \]
**Adjusted balance:**
\[ 3,364 \]
**Detailed Explanation of Adjustments:**
1. **Deposits in transit** are amounts deposited but not yet recorded by the bank. They are added to the bank balance.
2. **Outstanding checks** are checks written by the company that have not yet cleared the bank. They are deducted from the bank balance.
3. **Bank service charge** is deducted from the company’s ledger balance because it is an expense not yet recorded.
4. **Error in recording the check**: The check was recorded as $66 instead of $75, leading to a $9 error. This amount must be deducted from the ledger balance to correct the error.
In the process of bank reconciliation, the goal is to reconcile the differences between the company's records and the bank statement to ensure that the ending balances match. This includes adjustments for any transactions not yet recorded in either the ledger or the bank statement.
Transcribed Image Text:# Bank Reconciliation Guide
Using the following information:
1. The bank statement balance is $3,322.
2. The cash account balance is $3,424.
3. Outstanding checks amounted to $693.
4. Deposits in transit are $735.
5. The bank service charge is $51.
6. A check for $75 for supplies was recorded as $66 in the ledger.
Prepare a bank reconciliation for Miller Co. for August 31.
## Miller Co.
### Bank Reconciliation
### August 31
- **Cash balance according to bank statement:** $3,322
- **Add deposits in transit:** $735
- **Subtotal:** $4,057
- **Less outstanding checks:** $693
- **Adjusted bank balance:** $3,364
- **Cash balance according to company books:** $3,424
- **Less bank service charges:** $51
- **Less error in recording check:** $9 (the difference between $75 and $66)
- **Adjusted book balance:** $3,364
### Explanation of the Process:
1. **Bank Statement Adjustments:**
- Begin with the balance on the bank statement ($3,322).
- Add deposits that are in transit but not yet recorded by the bank ($735).
- Subtract checks that have been issued but not yet cashed or recorded by the bank as outstanding checks ($693).
2. **Company Books Adjustments:**
- Start with the balance on the company’s cash account books ($3,424).
- Deduct the bank service charges ($51).
- Correct any errors in the company's records. In this case, a check was incorrectly recorded, so the difference ($9) must be subtracted.
3. **Adjust Balances:**
- Ensure both the adjusted bank balance and the adjusted book balance match. In this example, both should be $3,364 after making the necessary adjustments.
This reconciliation process helps in verifying the accuracy of financial records and ensuring that the cash balance shown in the company's books matches the balance in the bank statement. This is crucial for maintaining the integrity of financial reporting.
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