This post is currently awaiting moderation.

Question

In: Accounting

Identifying timing differences related to a bank reconciliation. For each timing difference listed

Question Identifying timing differences related to a bank reconciliation. For each timing difference listed, identify whether the difference would be reported on the book side of the reconciliation or the bank side. In addition, identify whether the difference would be an addition or subtraction.

a. Deposit in transit

b. Bank collection

c. Debit memorandum from bank

d. EFT cash receipt

e. Outstanding checks

f. $1,000 deposit erroneously recorded by the bank as $100

g. Service charges

h. Interest revenue

i. $2,500 cash payment for rent expense erroneously recorded by the business as $250

j. Credit memorandum from bank

Solutions

Expert Solution

Step 1: Definition of the bank reconciliation statement

Bank reconciliation is a statement that is prepared to remove the errors from the cash book balance and the bank balance. Due to some reasons the cash book balance and the bank balance does not match to remove these difference bank reconciliations statement is prepared.

Step 2: Effect of the timing difference

Deposit in transit:

Deposit in transit would be reported on the bank side of the reconciliation, and the difference is added.

Bank collection:

It is the type of receipt directly received by the bank, and this amount is not recorded in the company’s books. Hence this will affect the book side of the company, and it is added.

Debit memorandum from the bank:

A debit memorandum from the bank is the type of deduction that the bank deducts. It is recorded in the bank statement, but it is not recorded in the book side of the company. Hence, this would affect the book side of the company, and it is subtracted from the balance.

EFT cash receipts:

The difference in the EFT receipts would be recorded in the book side of the company. The EFT receipts will be added as EFT receipts.

Outstanding Checks:

The outstanding checks are recorded on the bank side of the reconciliation. This will be deducted as outstanding checks.

$1,000 deposit erroneously recorded by the bank as $100

This difference will be recorded on the bank side, and the difference amount is added.

Service Charges:

Service charges are the charges that are deducted by the bank directly. Hence, it will affect the book side, subtracted as a service charge from the balance.

Interest Revenue

Interest revenue is a deposit made by the bank. Hence it would affect the book side, and it is added to the balance.

$2,500 cash payment for rent expense erroneously recorded by the business as $250

This is what is made in the company’s books; hence, this affects the book side, and the difference amount is deducted from the cash balance.

Credit memorandum from bank

A credit memorandum is a type of receipt received from the bank. It affects the book side of the company, and it is added to the cash balance.

a Added

b Added

c Subtracted

d Added

e Deduction

f Added

g Subtracted

h Added

i Subtracted

j Added

Sahil Dangi answered 2 years ago

Next > < Previous

Related Solutions

Question List some examples of timing differences, and for each difference, determine if it would affect the book side of the reconciliation or the bank side of the reconciliation.

Prepare bank reconciliation and related entries. AP The bank portion of the bank reconciliation for Katsaris...

Prepare bank reconciliation and related entries. AP The bank portion of the bank reconciliation for Katsaris Company at August 31, 2017, was as follows: KATSARIS COMPANYBank Reconciliation August 31, 2017 Cash balance per bank $13,229 Add: Deposits in transit 2,350 15,579 Less: Outstanding cheques #4451 $1,740 #4460 549 #4461 723 #4462 1,840 #4464 620 5,472 Adjusted cash balance per bank $10,107 The unadjusted cash balance per books on September 30, 2017, was $10,228. The September bank statement showed the following:...

list some examples of timing differences and for each difference determine if it would affect the...

list some examples of timing differences and for each difference determine if it would affect the book side of the reconciliation or the bank side of the reconciliation

Introduction to Accounting Problem #5- Bank Reconciliation A) From the facts listed below, prepare a Bank...

Introduction to Accounting Problem #5- Bank Reconciliation A) From the facts listed below, prepare a Bank Reconcilation for the Ryan Company at 11/30/18: 1) Balance per General Ledger Account- Cash $2,549.99 2) Balance per Citibank bank checking Account $3,359.78 3) Checks issued which did not clear the bank statement at 11/30/16 $1544.99 4) Deposits made which did not clear the bank account at 11/30/16 $816.20 5) CM on Citibank Statement for Note Receivable of $408.00: Note Receivable $400.00 + Interest...

Why is it important to prepare a bank reconciliation for each bank account at the end...

Why is it important to prepare a bank reconciliation for each bank account at the end of the month b) Does it make sense for the same person who prepares the daily cash deposits for the company to also perform the monthly bank reconciliation (in your answer, be sure to name any specific internal control procedures that may be applicable)? c) Describe the different types of audit opinions.

Items on a Bank Reconciliation Assume that a company is preparing a bank reconciliation for the...

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...

Question What is bank reconciliation? What is the objectives of the bank reconciliation statement?

Preparing a bank reconciliation

Question Preparing a bank reconciliationThe Cash account of Guard Dog Security Systems reported a balance of $2,540 at December 31, 2018. There were outstanding checks totaling $400 and a December 31 deposit in transit of $100. The bank statement, which came from Park Cities Bank, listed the December 31 balance of $3,340. Included in the bank balance was a collection of $510 on account from Brendan Ballou, a Guard Dog customer who pays the bank directly. The bank statement also...

Bank Reconciliation The following bank reconciliation was prepared as of June 30, 20Y7: Poway Co. Bank...

Bank Reconciliation The following bank reconciliation was prepared as of June 30, 20Y7: Poway Co. Bank Reconciliation For the Month Ended June 30, 20Y7 Cash balance according to bank statement $16,185 Adjustments: Outstanding Check No.1067 $575 Outstanding Check No.1106 470 Outstanding Check No.1110 1,050 Outstanding Check No.1113 910 Deposit of June 30 not recorded by bank (6,600) Total adjustments (3,595) Adjusted balance $12,590 Cash balance according to company’s records $8,985 Adjustments: Proceeds of note collected by bank: Face value $6,000...

Bank Reconciliation The following information is available to assist you in preparing a bank reconciliation for...

Bank Reconciliation The following information is available to assist you in preparing a bank reconciliation for Calico Corners on May 31: The balance on the May 31 bank statement is $8,432.11. Not included on the bank statement is a $1,250 deposit made by Calico Corners late on May 31. A comparison between the canceled checks returned with the bank statement and the company records indicated that the following checks are outstanding at May 31: No. 123 $23.40 No. 127 145.00...

Subjects