Question

Harris Company had checks outstanding totaling $4,948 on its May bank reconciliation. In June, Harris Company issued checks totaling $41,405. The June bank statement shows that $25,688 in checks cleared the bank in June. A check from one of Harris Company's customers of $348 was also returned marked "NSF." Determine the amount of outstanding checks on Harris Company's June bank reconciliation. Select the correct answer. $20,665 $67,093 $20,740 $20,317

Answer 1

The correct option is A,$20,665

Step-by-step explanation:

The amount to be shown as outstanding checks is made up of the opening outstanding checks plus the checks issued in the current month less checks cleared by the bank in the current month.

Opening balance of outstanding checks is $4,948

Checks in current month $41,405

Checks cleared by the bank ($25,688)

Checks outstanding at month end $20,665

The status of the check returned marked non-sufficient funds still remains the same and cannot be deducted from the computation above until it is finally cleared by the bank or written back to the cash account without reissuing another check in the name of the same beneficiary.

Answer 2

$20,665

Step-by-step explanation:

The bank reconciliation is one done between the balance per the books and balance per the bank statement. This is usually as a result of transactions known as reconciling items. These are items that have either been recognized in books but yet to be recorded by the bank or vice versa, transactions recorded wrongly by one of the parties etc.

To reconcile the two balance moving from the bank statement balance to the cash account balance;

The amount of outstanding checks on Harris Company's June bank reconciliation is the net to amount of checks cleared and the total of checks written. This amount

= $4,948 + $41,405 - $25,688

= $20,665

The Company's customers of $348 was also returned marked "NSF is a part of the outstanding checks.