The accountant for Truesdale Inc.prepared the bank reconciliation when the April 30 bank statement was received in the mail.A debit memorandum enclosed with the bank statement listed service charges in the amount of $60.These charges were not recorded by Truesdale prior to receiving the bank statement.How would the company record the required adjusting entry for this item?

Question

Quizplus · Accepted Answer

The service charges incurred by the bank are an expense for Truesdale Inc. and should be recorded as a miscellaneous expense. The adjusting entry to record this expense would be to debit Miscellaneous Expense for $60 and credit Cash for $60. Option A is incorrect because recording the service charges as revenue would overstate the company's revenue. Option B is incorrect because recording the service charges as a revenue when they are actually expenses would be incorrect. Option D is incorrect because Outstanding Checks Expense is not relevant in this situation. Option E is incorrect because recording the service charges as a miscellaneous expense would be correct, but debiting Cash would not be necessary.

The Accountant for Truesdale Inc