Bank Reconciliation Identify each of the following reconciling items as: a. an a
ID: 2395601 • Letter: B
Question
Bank Reconciliation Identify each of the following reconciling items as: a. an addition to the cash balance according to the bank statement b. a deduction from the cash balance according to the bank statement c. an addition to the cash balance according to the company's records d. a deduction from the cash balance according to the company's records (None of the transactions reported by bank debit and credit memos have been recorded by the company.) Item Treatment 1. Bank service charges, $30 2. Check of a customer returned by bank to company because of insufficient funds, $400. 3. Check for $320 incorrectly recorded by the company as $230. 4. Check for $1,100 incorrectly charged by bank as $110. 5. Deposit in transit, $3,300 6. Outstanding checks, $7,950. 7. Note collected by bank, $10,500.Explanation / Answer
Answer:
Item
Treatment
1
Bank service charges, $30
(d)
Deduction to the cash balance according to the Company’s records
2
Check of a customer returned by bank to depositor because of insufficient funds $400
(d)
Deduction to the cash balance according to the Company’s records
3
Check of $320 was incorrectly recorded by
the company as $230
(d)
Deduction to the cash balance according to the Company’s records
4
Check of $1000 was incorrectly charged by bank as $110
(b)
Deduction from the cash balance according to the bank statement
5
Deposit in transit $3300
(a)
Addition to the cash balance
according to the bank statement
6
Outstanding checks,$7950
(b)
Deduction from the cash balance according to the bank statement
7
Note collected by bank $10,500
(,c)
Addition to the cash balance according to the Company’s records
Item
Treatment
1
Bank service charges, $30
(d)
Deduction to the cash balance according to the Company’s records
2
Check of a customer returned by bank to depositor because of insufficient funds $400
(d)
Deduction to the cash balance according to the Company’s records
3
Check of $320 was incorrectly recorded by
the company as $230
(d)
Deduction to the cash balance according to the Company’s records
4
Check of $1000 was incorrectly charged by bank as $110
(b)
Deduction from the cash balance according to the bank statement
5
Deposit in transit $3300
(a)
Addition to the cash balance
according to the bank statement
6
Outstanding checks,$7950
(b)
Deduction from the cash balance according to the bank statement
7
Note collected by bank $10,500
(,c)
Addition to the cash balance according to the Company’s records
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