Question

Minor Company had checks outstanding totaling $4,092 on its April bank reconciliation. In May, Minor Company issued checks totaling $41,984. The May bank statement shows that $25,578 in checks cleared the bank in May. A check of $842 from one of Minor Company's customers was also returned marked "NSF." The amount of outstanding checks on Minor Company's May bank reconciliation should be

Answer 1

Answer:

Explanation:

Given that,

Minor Company had checks outstanding totaling $4,092

Minor Company issued checks totaling $41,984

The May bank statement shows that $25,578 in checks cleared the bank in May

Particular                                                           Amount in $

Opening Outstanding Checks                          4,092

Add: Checks issued during the month           + 41,984

                                                                            46,076

Less: Checks cleared by the bank                   - 25,578

Closing Outstanding Checks Balance             20498

The impact of this Outstanding checks is that Bank balance will be greater than the company's actual balance of cash in books of account of the company.

Treatment of Outstanding Checks in Bank Reconciliation is when adjusted balance as per the bank is calculated at end of a period, Total amount of outstanding checks is deducted from the ending balance of the bank statement.