Question

2) Bank Reconciliation (4 marks) ne the code letters below. indicate how each of the items listed would be handled when preparing a reconciliation Enter the opereeriate code letter in the space to the left of cochem Code A Add to books. B Deduct from books. C Add to bank. D Deduct from bank. E Does not affect the bank reconciliation. Items 1. Outstanding cheques Cheque for $320 correctly written and aldhy the bank but incorrectly entered in the general journal for $230. Deposit in transit Bank returns deposited cheque marked NSF. 5. Bank collects accounts receivable for depositor electronically 6. Bank debit memorandum for cheque printing fees 7. Petty cash custodian has $86 in paid petty cash vouchers that have not been reimbursed. 8. Bank charged a cheque against the company that should have been charged to another company. Scanned with CamScanner

Answer 1

Here we need to make bank reconciliation statement

Analysis of each transaction

Here we are starting with bank balance in books to evaluate bank balance in bank

1. A

outstanding cheques means organisation gave cheques to outsiders but they didn't deposited the cheques in the bank due to that reason our bank balance in bank is higher than bank balance in books. So add the value to the bank balance in books.

2. B

thia transaction is properly done but recording of transaction is wrong. After issuing of cheque we need to debit amount to bank account in books but by mistake it was recorded in general journal. Actually this amount to be debited to bank account in books but not debited. due to this reason bank balance in books is greater than bank balance in Bank. So Deduct the amount from bank balance in books.

3. B

The deposit is in transit. the situation refers to high bank balance as per books and less bank balance as per bank. So due to get reconciled deduct the amount from bank balance as per books.

4. A

Cheques returned from bank. It means at the time of issue of cheques then we may deducted amount from bank balance in out books but which was really not debited from the bank. So now add the amount to its bank balance as per books

5. A

bank collects amount from the debtor. This increases the bank balance in bank and shows less bank balance as per books so add the amount to the bank balance as per books.

6. B

bank collected charges. this reduces balance as per bank and shows higher in bank balance as per books so deduct the amount in the bank balance as per books.

7. E

This transaction does not effect the bank reconciliation statement.

This transaction entirely effect cash book and petty cash book.

8. B

Bank wrongly debited our account. This leads to reduction of bank balance as per Bank compared to bank balance as per books. For Reconciliation purpose deduct the amount from bank balance as per books. But don't make any adjustments to bank account in books of accounts. Deduct the amount from bank balance as per books only for the purpose of reconciliation.

These are all the information required to solve the given question.

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Thank you.