The following data were obtained from the bank statement and from the process of reconciling it: Bank service charges = $20
Deposit outstanding = $150
Interest earned on the bank account = $10
Checks outstanding = $400
Which items should be deducted from and added to the bank balance in completing the reconciliation?
A)Deduct checks outstanding;add service charges and deposit outstanding.
B)Deduct interest earned;add deposit outstanding.
C)Deduct checks outstanding;add deposit outstanding.

Question

Quizplus · Accepted Answer

Deduct checks outstanding because they have been recorded by the company but not yet by the bank, and add deposit outstanding because it has been deposited by the company but not yet recorded by the bank. Service charges and interest earned adjustments are made to the company's books, not the bank balance.

The Following Data Were Obtained from the Bank Statement and from the Process