Identify each of the following reconciling items as: an addition to the cash balance according to the bank statement a deduction from the cash balance according to the bank statement an addition to the cash balance according to the company's records 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, $90. 2. Check of a customer returned by bank to company because of insufficient funds, $520. 3. Check for $420 incorrectly recorded by the company as $240. 4. Check for $1,440 incorrectly charged by bank as $140. 5. Deposit in transit, $5,310. 6. Outstanding checks, $10,370. 7. Note collected by bank, $12,600.
Identify each of the following reconciling items as: an addition to the cash balance according to the bank statement a deduction from the cash balance according to the bank statement an addition to the cash balance according to the company's records 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, $90. 2. Check of a customer returned by bank to company because of insufficient funds, $520. 3. Check for $420 incorrectly recorded by the company as $240. 4. Check for $1,440 incorrectly charged by bank as $140. 5. Deposit in transit, $5,310. 6. Outstanding checks, $10,370. 7. Note collected by bank, $12,600.
College Accounting, Chapters 1-27
23rd Edition
ISBN:9781337794756
Author:HEINTZ, James A.
Publisher:HEINTZ, James A.
Chapter7: Accounting For Cash
Section: Chapter Questions
Problem 2CE
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Question
Identify each of the following reconciling items as:
- an addition to the cash balance according to the bank statement
- a deduction from the cash balance according to the bank statement
- an addition to the cash balance according to the company's records
- 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, $90. |
|
| 2. Check of a customer returned by bank to company because of insufficient funds, $520. |
|
| 3. Check for $420 incorrectly recorded by the company as $240. |
|
| 4. Check for $1,440 incorrectly charged by bank as $140. |
|
| 5. Deposit in transit, $5,310. |
|
| 6. Outstanding checks, $10,370. |
|
| 7. Note collected by bank, $12,600. |
Expert Solution
Step 1
Ideally cash balance as per cash book and bank balance as per bank statement must reconcile with each other. If there is any difference, then bank reconciliation statement must be prepared to reconcile them.
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