7. for the following table, determine how each item below would affect the bank reconciliation\ntransaction\t…
7. for the following table, determine how each item below would affect the bank reconciliation\ntransaction\tbook side or bank side?\tincrease or decrease?\ndeposit in transit\nbank service charge\ninterest income\nnonsufficient funds charge\nnote collected\ncheck printing charge\noutstanding check\nbank made a mistake and deposited $50 in your account from someone else
Answer
Explanation:
Step1: Analyze deposit in transit
A deposit in transit is a deposit made by the company but not yet recorded by the bank. It affects the bank - side and increases the bank balance. So, Bank Side, Increase.
Step2: Analyze bank service charge
A bank service charge is a fee charged by the bank that the company has not yet recorded in its books. It affects the book - side and decreases the book balance. So, Book Side, Decrease.
Step3: Analyze interest income
Interest income earned on the bank account is often first recorded by the bank and then needs to be recorded by the company. It affects the book - side and increases the book balance. So, Book Side, Increase.
Step4: Analyze non - sufficient funds charge
A non - sufficient funds (NSF) charge occurs when a check received by the company bounces. The bank deducts the amount from the company's account, and the company needs to record it. It affects the book - side and decreases the book balance. So, Book Side, Decrease.
Step5: Analyze note collected
When the bank collects a note on behalf of the company, the bank has already recorded the increase in the account balance, and the company needs to record it. It affects the book - side and increases the book balance. So, Book Side, Increase.
Step6: Analyze check printing charge
A check printing charge is a fee charged by the bank for providing checks. The company has not yet recorded it in its books. It affects the book - side and decreases the book balance. So, Book Side, Decrease.
Step7: Analyze outstanding check
An outstanding check is a check written by the company but not yet cleared by the bank. It affects the bank - side and decreases the bank balance. So, Bank Side, Decrease.
Step8: Analyze bank mistake
The bank made an incorrect deposit. Since it was the bank's action, it affects the bank - side. To correct the error, the bank balance needs to be decreased. So, Bank Side, Decrease.
Answer:
| Transaction | Book Side or Bank Side? | Increase or Decrease? |
|---|---|---|
| Deposit in Transit | Bank Side | Increase |
| Bank Service Charge | Book Side | Decrease |
| Interest Income | Book Side | Increase |
| Nonsufficient Funds Charge | Book Side | Decrease |
| Note Collected | Book Side | Increase |
| Check Printing Charge | Book Side | Decrease |
| Outstanding Check | Bank Side | Decrease |
| Bank made a mistake and deposited $50 in your account from someone else | Bank Side | Decrease |