Question

Use the following to answer questions 5 - 8 Bank Reconciliation: Identify whether the item should be added or subtracted from the bank balance or the company balance. Use the number (1-4) for your response. For instance, if the amount should be added to bank statement balance you would input 1. 1. Added to bank statement balance 2. Subtracted from bank statement balance 3. Added to company cash balance 4. Subtracted from company cash balance | 5 Item | Bank error, company deposited $400 and the bank recorded $40 Bank service charges Bank collected a note receivable for the company Company error, wrote a check for $100 but recorded it for $1,000 | 7 8

Answer 1

	Item	#
5	Bank error, company deposited $400 and the bank recorded $40	Added to bank statement balance
6	Bank service charges	Subtracted from company cash balance
7	Bank collected a note receivable for the company	Added to company cash balance
8	Company error, worte a check for $100 but recorded it for $1,000	Added to company cash balance

5- Bank error, company deposited $400 and the bank recorded $40, due to this bank balance was understated by $360, hence it should be added to bank statement balance.

6-Bank service charges, Due to this bank statement balance reduces and thus company cash balance must also be subtracted.

7- Bank collected a note receivable for the company, due to this bank statement balance increases and thus it should be added to company cash balance.

8- Company error, worte a check for $100 but recorded it for $1,000, due to this error company cash balance was by mistake reduced by $900 in excess, hence $900 should now be added to company cash balance.

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