During the month of July, Clanton Industries issued a check in the amount of $845 to a supplier on account. The check did not clear the bank during July. In preparing the July 31 bank reconciliation, the company should:
A) Add the check amount to the bank balance.
B) Deduct the check amount from the book balance of cash.
C) Add the check amount to the book balance of cash.
D) Make a journal entry in the company records for an error.
E) Deduct the check amount from the bank balance.

Question

Quizplus · Accepted Answer

The check that did not clear means that the bank balance has not been reduced by $845. Therefore, the company should deduct the check amount from the bank balance when preparing the bank reconciliation, so the correct balance can be determined. The book balance of cash should not be adjusted until the bank balance is reconciled.

During the Month of July, Clanton Industries Issued a Check