Final answer:
Journal entries from bank reconciliation serve to update a depositor’s cash account for items like bank fees and adjustments for outstanding checks and deposits in transit, ensuring accurate financial records.
Step-by-step explanation:
The purpose of journal entries based on bank reconciliation in the depositor’s accounts is primarily to update the depositor’s accounting records for transactions that have occurred but are not yet recorded in the depositor’s books. These entries are made to record various discrepancies between the bank statement and the depositor’s cash account due to timing differences or bank errors, which could include bank charges, deposits in transit, outstanding checks, and corrections of previous errors. Specifically:
- Journal entries are not made to record deposits or checks since those are typically already recorded by the depositor when the deposit is made or the check is written.
- They are used to record the bank charges that the bank might have deducted from the account, which the depositor needs to account for in their books.
- They correct the cash account balance for adjustments due to outstanding checks (checks written by the depositor but not yet cleared by the bank) and deposits in transit (deposits made but not yet credited by the bank).