Question

Our company wrote a check for $200 but mistakenly recorded the transaction in the general journal as $2,000. How would this error be included on the bank reconciliation?

a. as a deduction on the bank side
b. as an addition on the book side
c. as an addition on the bank side
d. as a deduction on the book side

Answer 1

The error would be included on the bank reconciliation as a deduction on the book side.

Step-by-step explanation:

In this scenario, the error made by recording the transaction in the general journal as $2,000 instead of $200 would be included on the bank reconciliation as a deduction on the book side.

When preparing a bank reconciliation, we compare the company's records (the book side) with the bank statement (the bank side). Since the company mistakenly recorded the transaction for $2,000, which is $1,800 more than the actual amount, this error needs to be deducted from the book side to match the correct transaction amount of $200.