Following are seven items a through g that would cause Xavier Company\'s book ba

Question

Following are seven items a through g that would cause Xavier Company's book balance of cash to differ from its bank statement balance of cash.

a. A service charge imposed by the bank.

b. A check listed as outstanding on the previous period's reconciliation and still outstanding at the end of this month.

c. A customer's check returned by the bank is marked "Not Sufficient Funds. (NSF)"

d. A deposit that was mailed to the bank on the last day of the current month and is unrecorded on this month's bank statement.

e. A check paid by the bank at its correct $190 amount was recorded in error in the company's Check Register at $109.

f. An unrecorded credit memorandum indicated that bank had collected a note receivable for Xavier Company and deposited the proceeds in the company's account.

g. A check was written in the current period that is not yet paid or returned by the bank. Indicate where each item a through g would appear on Xavier Company's bank reconciliation by placing its identifying letter in the parentheses in the proper section of the form below.

Explanation / Answer

Book statement of cash

Less:

A service charge imposed by the bank

Interest charges for cheque not cleared due to insufficient balance

Deposit

Wrong amount cheque (190-109) 81

Bank statement cash balance

Add: Deposit mailed not recorded

Note receivable

Service charges imposed by bank

Less:

Cheque outstanding on previous balance

Current month cheque

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