Question

Items on a Bank Reconciliation

Assume that a company is preparing a bank reconciliation for the month of June. It reconciles the bank balance and the book balance to the correct balance.

For each of the following items, indicate whether the item is an addition to the bank balance, an addition to the book balance, a deduction from the bank balance, a deduction from the book balance, or would not appear on the June reconciliation. Also, choose Yes or No for each answer to indicate whether or not the item will require an adjustment on the company's books.

Item	Impact	Adjustment required?
1. Check written in June but not yet returned to the bank for payment
2. Customer's NSF check
3. Customer's check written in the amount of $54 but recorded on the books in the amount of $45*
4. Service charge for new checks
5. Principal and interest on a customer's note collected for the company by the bank
6. Customer's check deposited on June 30 but not reflected on the bank statement
7. Check written on the company's account, paid by the bank, and returned with the bank statement
8. Check written on the company's account for $123 but recorded on the books as $132*
9. Interest on the checking account for the month of June

*Answer in terms of the adjustment needed to correct for the error.

Answer 1

Item	Impact	Adjustment required?
1. Check written in June but not yet returned to the bank for payment	A deduction from the bank balance	No
2. Customer's NSF check	A deduction from the book balance	Yes
3. Customer's check written in the amount of $54 but recorded on the books in the amount of $45*	A deduction from the book balance	Yes
4. Service charge for new checks	A deduction from the book balance	Yes
5. Principal and interest on a customer's note collected for the company by the bank	An addition to the book balance	Yes
6. Customer's check deposited on June 30 but not reflected on the bank statement	An addition to the bank balance	No
7. Check written on the company's account, paid by the bank, and returned with the bank statement	Would not appear (NA)	No
8. Check written on the company's account for $123 but recorded on the books as $132*	An addition to the book balance	Yes
9. Interest on the checking account for the month of June	An addition to the book balance	Yes