Question

OURCES ΠΗ Do It Review 7-03 Roger Richman owns Richman Blankets. He asks you to explain how he should treat the following reconciling items when reconciling the company's bank account. Deduct from balance per bank Add to balance per bank 2-12 7-13 -03 1. Outstanding checks. 2. A deposit in transit. 3. The bank charged to the company account a check written by another company. 4. A debit memorandum for a bank service charge. a-b (Part lon) LINK TO TEXT

Answer 1

Transactions Action 1) Outstanding checks 2) A deposit in transit 3) The bank charged to the company account a check written by another company Add to balance per bank 4) A debit memorandum for a bank service charge. Deduct from balance per bank Add to balance per bank Deduct from balance per cash book Explanation: Bank reconciliation statement is a statement prepared at a particular date for reconciling the difference between cash book and bank book. There may a handful of reasons for such difference. If any of the mistakes done by bank that reduces firm's cash balance per bank, it must be added to cash balance per bank. If any of the mistakes done by bank that increases firm's cash balance per bank, it must be deducted from cash balance per bank. If any of the bank transactions that decreases cash balance per bank but not recorded in cash book, it must be deducted from cash balance per cash book. If any of the bank transactions that increases cash balance per bank but not recorded in cash book, it must be added to cash balance per cash book. Accordingly, actions are taken against each transaction listed above from (1) through (4).