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Week 8 Checkpoint- Internal Control and Bank Reconciliations

Week 8 Checkpoint- Internal Control and Bank...

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QS 8-6 Bank reconciliation P3 1. For each of the following items, indicate whether its amount (i) affects the bank or book side of a bank reconciliation and (ii) represents an addition or a subtraction in a bank reconciliation: a. Outstanding checks Affects banks side and is a subtraction b. Debit memos Affects the book side and are subtractions c. NSF checks Affects book side and are subtractions d. Unrecorded deposits Affects book side and are additions, outstanding deposits affect the bank side and are additions e. Interest on cash balance Affects book side and are additions f. Credit memos Affects book side and are additions g. Bank service charges Affects book side and are subtractions 2. Which of the items in part 1 require an adjusting journal entry? Usually interest and bank services charges would need adjusting entries when the bank reconciliation is complete. But, NSF Checks and their fees, debit memos, and credit memos would need adjusting entries if the bank did not send notice of these transactions in advance.
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