Question

For each timing difference​ listed, identify whether the difference would be reported on the book side of the reconciliation or the bank side of the reconciliation. In​ addition, identify whether the difference would be an addition or subtraction.

a. Deposit in transit
b. Bank collection
c. Debit memorandum
d. EFT cash receipt
e. Outstanding checks
f. $1,000 deposit erroneously recorded by the bank as $100
g. Service charges
h. Interest revenue
i. $2,500 cash payment for rent expense erroneously recorded by the business as Bank $250
j. Credit memorandum from bank

Answer 1

a.bank reconciliation, addition

b.book side, addition, subtraction

c.book side, subtraction

d.book side, addition

e.bank reconciliation, subtraction

f.bank reconciliation, subtraction

g.book side, subtraction

h.book side, addition

i.book side, subtraction

j.book side, addition

Step-by-step explanation:

In book side, we enter transactions that were recorded by the company`s bank but not included in the cash book. These include service charges and interest revenue on bank account.Also errors made in cash book are recorded here.

In the bank reconciliation side, we record deposits and receipts entered in the cash book not yet reflecting in the bank statement and other errors related to construction of the bank statement.