FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Transcribed Image Text:### Bank Reconciliation Example
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**
- Bank statement balance: $3,322
- Add deposits in transit: +$735
- Deduct outstanding checks: -$693
**Adjusted balance**: $3,364
**Cash balance according to company's records**
- Cash account balance: $3,424
- Deduct bank service charge: -$51
- Deduct error in recording check: -$9
**Adjusted balance**: $3,364
The graph illustrates the adjustments made to reconcile the bank statement balance and the cash account balance. The final adjusted balances from both the bank and company's records match, confirming the reconciliation accuracy.
Transcribed Image Text:**Bank Reconciliation for Miller Co. - Educational Example**
**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**
1. **Cash balance according to the bank statement: $3,322**
2. **Adjustments:**
- **Add deposits in transit:** $735
- **Deduct outstanding checks:** -$693
3. **Adjusted balance:** $3,364
4. **Cash balance according to the company's records: $3,424**
5. **Adjustments:**
- **Deduct bank service charge:** -$51
- **Deduct check error:** -$9 (The check for $75 was recorded as $66, creating a $9 discrepancy)
6. **Adjusted balance:** $3,364
---
### Explanation of the Diagram:
This bank reconciliation statement clarifies the difference between the bank statement balance and the company's cash account records by accounting for several transactions that have not been processed or included by both parties.
- The diagram presents a two-column format; the left column lists the steps and adjustments needed, while the right column shows the corresponding monetary values.
- The first step in the reconciliation process involves adjusting the bank statement balance by adding deposits in transit ($735) and deducting outstanding checks ($693), resulting in an adjusted balance of $3,364.
- The second step adjusts the company’s cash balance by deducting the bank service charge ($51) and the check recording discrepancy ($9), also resulting in an adjusted balance of $3,364.
This example helps learners understand how to align the bank statement balance with the company’s records, ensuring accuracy in financial reporting.
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