Question

Ned Douglas owns Ned’s Blankets. Ned asks you to explain how he should treat the following reconciling items when reconciling the company’s bank account.Outstanding checks.select an explanationDeduct from balance per bank2.A deposit in transit.select an explanationAdd to balance per bank3.The bank charged to our account a check written by another company.select an explanationAdd to balance per bank4.A debit memorandum for a bank service charge.

Answer 1

In accounting, the purpose of reconciliation is to compare two sets of records for correction and make sure they are in agreement.

Here, Ned have some items which needed to be reconciled with the company’s bank account.

1. For "the Outstanding checks", he should deduct the amount from balance per bank
2. For "a deposit in transit", he should add to balance per bank
3. For "the bank charged to our account a check written by another company", he should add to balance per bank and notify the bank of its error.
4. For "a debit memorandum for bank service charge", he should deduct from balance per books.

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