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Damon Company receives its monthly bank statement, which reports a balance of $2,000. After comparing this to the company’s cash records, Damon’s accountants determine that deposits outstanding total $4,200 and checks outstanding total $4,450. Required: Calculate the reconciled bank balance for cash. (Amounts to be deducted should be indicated with a minus sign.)

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Answer:

The reconciled bank balance for cash is $1,750.

Explanation:

Bank reconciliation statement is prepared to reconcile the bank statement of a company to the balance per cash book (general ledger). The discrepancies between the two books are as a resulting of timing of transactions, outstanding checks, direct credit transfers to bank, among others.

The following is a way of reconciling the balance per bank statement to the cash book:

Damon Company

Bank reconciliation statement

Balance per bank statement           $2,000

Add: Outstanding deposit               $4,200

Less: Outstanding checks              ($4,450)

Balance per cash book                     $1,750

Therefore, the reconciled bank balance for cash is $1,750.

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