Question

A $250 bank deposit made on the last day of the month did not appear on this month's bank statement. How would this item be treated on the bank reconciliation?

Answer 1

In a bank reconciliation, the $250 deposit made on the last day of the month but not shown on the statement should be added to the bank statement balance. This adjusts for timing differences between the company's records and the bank's records to reflect the correct cash balance.

Step-by-step explanation:

The question relates to how a $250 bank deposit made on the last day of the month, which did not appear on the bank statement, should be treated on a bank reconciliation. In preparing a bank reconciliation statement, any deposits in transit, such as the $250 deposit in question, should be added to the bank statement balance.

This adjustment is made because the deposit was made too late to appear on the statement for the current month, but it is indeed part of the available cash balance of the account. Such deposits are funds that have been recorded by the company but not yet by the bank, leading to a timing difference between the company's records and the bank statement.

The bank reconciliation process ensures that these timing differences are accounted for, resulting in an adjusted bank balance that accurately reflects the true amount of cash.