Question

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:

Answer 1

Answer: Deduct the check amount from the bank balance.

A check amounting to $845 was issued to a supplier by Clanton industries in July and during that month the check did not clear the bank. In preparing the July 31 bank reconciliation, the check amount should be deducted from the bank balance considering the check has already been issued to the supplier.

Answer 2

In preparing bank reconciliation for 31 July, the company should deduct the check amount from the bank balance.

Further Explanation:

Bank reconciliation statement:

It is a process of reconciling cash balance on the company’s balance sheet with its bank statement. It is done at regular intervals as it helps to ensure the correctness of the cash records and detect cash manipulations and fraud. The reasons for the difference in cash balance as per the cash book and bank balance in the bank statement is:

• The check has been recorded in the cash book but has not yet been credited by the bank.

• The Check has been issued by the company but has not yet been debited by the bank.

• Bank service fees are charged from the bank account but are not recorded.

• Banks interest that is credited in the accounts but is  not recorded

In this case, the company has issued the check to the supplier, but they are yet not processed by the bank. So, the company should deduct the check amount from the bank balance.

Learn more:

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Answer details:

Grade: High School

Subject: Accounting

Chapter: Bank Reconciliation Statement

Keywords: the month of July, Clanton industries, a check, amount of $845, a supplier the check did not clear the bank, bank reconciliation Statement, check issued, check deposited, deduct the bank balance.