E5-16 Bank reconciliation Identify each of the following reconciling items as: (
ID: 2457193 • Letter: E
Question
E5-16 Bank reconciliation Identify each of the following reconciling items as: (a) an addition to the cash balance ac- cording 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, or (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.) 1. Bank service charges, $36. 2. Check drawn by company for $375 but incorrectly recorded by company as $735. 3. Check for $50 incorrectly charged by bank as $500. 4. Check of a customer returned by bank to company because of insufficient funds, $1,200. 5. Deposit in transit, $12,375. 6. Outstanding checks, $14,770. 7. Note collected by bank, $10,600.
E5-17 Entries based on bank reconciliation Which of the reconciling items listed in Exercise 5-16 are required to be recorded in the company’s accounts?
Explanation / Answer
1) bank service charges - a deduction from the cash balance according to company's records.
2) An addition to the cash balance according to company's record
3) an addittion to the cash balance according to the bank statemetnt
4) A deduction from the cash blance according to company's records
5) addittion for the cash balance according to bank statement
6) deduction from the cash blance according to bank statment
7) addittion to the cash balance according to companys records
(2) transaction number 1,2,4 and 7 will be recorded in the companys books
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