An accounting clerk for Chesner Co. prepared the following bank reconciliation: Chesner Co. Bank Reconciliation August 31 Cash balance according to company’s records $11,100
Add: Outstanding checks $3,585
Error by Chesner Co. in recording Check No. 1056 as $950 instead of $590 360
Note for $12,000 collected by bank, including interest 12,480 16,425
$27,525
Deduct: Deposit in transit on August 31 $7,200 Bank service charges 25 7,225
Cash balance according to bank statement $20,300

Required:
a. From the data prepared by the accounting clerk, prepare a new bank reconciliation for Chesner Co.,
b. If a balance sheet were prepared for Chesner Co. on July 31, 2016, what amount should be reported for cash?

See below

Explanation:

Chesner Co.

Bank reconciliation statement

a.

Cash balance according to bank statement

$20,300

Add:

Deposit in transit on July 31

$7,200

Deduct:

Outstanding checks

($3,585)

Balance

$3,615

Adjusted balance

$23,915

Cash balance according to company's record

$11,100

Add:

Error in recording check no

1056 as $950 instead of $590

$360

Note for $12,000 collected by bank including interest

$12,480

Deduct:

Bank service charge

($25)

Balance

$12,815

Adjusted balance

$23,915

b. The amount that should be reported as cash if a balance sheet were prepared for Chesner Co. on July 31, 2016 is $23,915

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