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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, 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, $50. 2. Check of a customer returned by bank to company because of insufficient funds, $520. 3. Check for $345 incorrectly recorded by the company as $435. 4. Check for $200 incorrectly charged by bank as $2,000. 5. Deposit in transit, $4,250. 6. Outstanding checks, $5,420. 7. Note collected by bank, $5,300.
Financial And Managerial Accounting
Solutions
Financial And Managerial Accounting
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, 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, $50.
- 2. Check of a customer returned by bank to company because of insufficient funds, $520.
- 3. Check for $345 incorrectly recorded by the company as $435.
- 4. Check for $200 incorrectly charged by bank as $2,000.
- 5. Deposit in transit, $4,250.
- 6. Outstanding checks, $5,420.
- 7. Note collected by bank, $5,300.
Identify the given reconciling items according to the company’s records.
Explanation of Solution
Bank reconciliation: Bank statement is prepared by bank. The company maintains its own cash records from its perspective. This is why the cash balance per bank and cash balance per books seldom agree. Bank reconciliation is the statement prepared by a company to remove the differences and disagreement between cash balance per bank and cash balance per books.
Identify the given reconciling items according to the company’s records:
- (a) An addition to the cash balance according to the bank statement.
The following items are reconciled as an addition to the cash balance according to the bank statement:
4. Check for $200 incorrectly charged by bank as $2,000.
5. Deposit in transit, $4,250.
- (b) A deduction from the cash balance according to the bank statement:
The following items are reconciled as a deduction from the cash balance according to the bank statement:
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