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# How should the adjustment be recorded in the general ledger?

by Rockefeller

Question:

The bank statement ending balance is \$45 lower than the general ledger bank balance. On the bank statement, there is a line item for bank charges and fees of \$45.

How should the adjustment be recorded in the general ledger?

SELECT ONLY ONE

Debit Bank Fees Expense \$45; Credit Retained Earnings \$45

Debit Bank Fees Expense \$45; Credit Bank Account \$45

Debit Bank Account \$45; Credit Retained Earnings \$45

Debit Retained Earnings \$45; Credit Bank Account \$45

Debit Bank Account \$45; Credit Bank Fees Expense \$45

Solution:

Due to unrecorded items, the cash book bank balance and the balance on the bank statement are sometimes unbalanced.

The bank fee of \$45 is an item recorded by the bank in the bank statement, not an item recorded in the cash book.

Therefore, the adjustment for this is to reduce the cash book-bank balance and recognize the expenses related to these bank charges in the income statement.

The following adjustment should be recorded in General Ledger:

 Account title Debit Credit Bank Fees Expense \$45 Bank Account \$45