Question

BE4-8 Indicate whether the firm should add or subtract each item below from its balance of cash or the bank's balance of cash in preparing a bank reconciliation. The first answer is provided as an example. If an item is not a reconciling item, state “No entry.” Bank Balance Subtract Company Balance No entry Reconciliation Items 1. Checks outstanding 2. NSF checks 3. Deposit recorded twice by company 4. Interest earned 5. Deposits outstanding 6. Bank service fees

Answer 1

	Reconciliation items			Bank Balance	Company Balance
1	Checks Outstanding			Subtract	No Entry
2	NSF Checks			No Entry	Subtract
3	Deposits recorded twice by company			No Entry	Subtract
4	Interest Earned			No Entry	Add
5	Deposits outstanding			Add	No Entry
6	Bank service fees			No Entry	Subtract