Question

In the normal operation of business, you receive a check from a customer and deposit it into your checking account. With your bank statement, you are advised that this check for $775 is "NSF." The bank also informs you that due to the amount of activity on your business account the monthly service charge is $75. During a bank reconciliation, you will(A) add both values to balance according to bank(B) subtract both values from balance according to books(C) subtract both values from balance according to bank(D) add both values to balance according to books

Answer 1

Answer:

(B) subtract both values from balance according to books

Explanation:

Provided, that the check deposited in bank is NSF.

Therefore, it will not be cashed,

Although such balance was already added to book balance as per accounting records, therefore, such amount shall be subtracted from accounting balance.

Further bank provides the information of charges which was not considered earlier.

Therefore, such amount shall also be deducted from accounting records.

Thus both such amounts shall be deducted from balance according to books.