Math  /  Data & Statistics

QuestionUsing the following information:
1. The bank statement balance is $4,690\$ 4,690.
2. The cash account balance is $5,080\$ 5,080.
3. Outstanding checks amounted to $715\$ 715.
4. Deposits in transit are $1,020\$ 1,020.
5. The bank service charge is $40\$ 40.
6. A check for $72\$ 72 for supplies was recorded as $27\$ 27 in the ledger.

Prepare a bank reconciliation for Miller Co. for August 31. Miller Co. Bank Reconcillation August 31 Cash balance according to bank statement $\$ \square \checkmark \square \square \square
Adjusted balance \square Cash balance according to company's records \square \square \qquad $\$ \square \ \square \squareAdjustedbalance$ Adjusted balance \$ \square$

Studdy Solution

STEP 1

What is this asking? We need to make the bank's balance and the company's balance match by figuring out the *true* cash balance. Watch out! Don't mix up which adjustments go on which side!
A helpful tip is to remember that we're always adding to one side and subtracting from the other.

STEP 2

1. Adjust the Bank Balance
2. Adjust the Company's Cash Balance
3. Final Reconciliation

STEP 3

Alright, let's kick things off with the **bank statement balance** of $4,690\$4,690.
This is our starting point!

STEP 4

Now, we need to add the **deposits in transit**, which are $1,020\$1,020.
These are deposits the company *knows* about, but the bank hasn't processed yet.
So, $4,690+$1,020=$5,710\$4,690 + \$1,020 = \$5,710.

STEP 5

Next, we subtract the **outstanding checks**.
These are checks the company has written, but haven't been cashed by the bank yet.
They total $715\$715.
So, $5,710$715=$5,000\$5,710 - \$715 = \$5,000, which is close to the company's cash balance, but not quite there yet!
This is our **adjusted bank balance**.

STEP 6

Let's begin with the **company's recorded cash balance** of $5,080\$5,080.

STEP 7

We need to subtract the **bank service charge** of $40\$40.
This is a fee the bank charges, and the company needs to account for it.
So, $5,080$40=$5,040\$5,080 - \$40 = \$5,040.

STEP 8

Remember that check for supplies?
It was recorded as $27\$27 but it was actually for $72\$72.
That means the company recorded $72$27=$45\$72 - \$27 = \$45 less than it should have.
To correct this, we subtract $45\$45 from the current balance: $5,040$45=$4,995\$5,040 - \$45 = \$4,995.
This is our **adjusted company balance**.

STEP 9

The **adjusted bank balance** is $5,000\$5,000, and the **adjusted company balance** is $4,995\$4,995.
They're super close, but not quite the same!

STEP 10

The difference is $5,000$4,995=$5\$5,000 - \$4,995 = \$5.
This tiny difference could be due to a small error somewhere, but we've done our best to reconcile the accounts.

STEP 11

Miller Co. Bank Reconciliation August 31
Cash balance according to bank statement: $4,690\$4,690 Add: Deposits in transit: $1,020\$1,020 Less: Outstanding checks: $715\$715 Adjusted balance: $4,995\$4,995
Cash balance according to company's records: $5,080\$5,080 Less: Bank service charge: $40\$40 Less: Error in recording check: $45\$45 Adjusted balance: $4,995\$4,995

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