10. If a check correctly written and paid by the bank for $428 is incorrectly recorded on the company's books for $482, the appropriate treatment on the bank reconciliation would be to *
To determine the appropriate treatment on the bank reconciliation for the given scenario, you need to understand the concept of bank reconciliation and how errors like this are corrected.
Bank reconciliation is a process that compares the company's records of its cash balance with the bank's records to identify any discrepancies. It helps to ensure that both sets of records are in agreement and to uncover any errors or fraudulent activities.
In this case, there is an error in recording the amount of a check issued. The correct amount should be $428, but it was incorrectly recorded as $482 in the company's books.
To accurately reflect this error on the bank reconciliation, the following steps should be taken:
1. Start with the adjusted bank balance: Begin the bank reconciliation by taking the balance reported by the bank and recording it as the beginning balance.
2. Add or subtract deposits in transit: Add any deposits made by the company that have not yet been recorded by the bank. These are called deposits in transit.
3. Deduct outstanding checks: Subtract any checks issued by the company that have not cleared the bank yet. These are called outstanding checks.
4. Adjust for bank errors: Take note of any errors made by the bank, such as recording incorrect deposits or withdrawals, and account for them by adding or deducting the appropriate amounts.
In this case, the error was made by the company in recording the check amount. The check was correctly paid by the bank for $428, but it was recorded incorrectly on the company's books as $482. To correct this discrepancy on the bank reconciliation, you would need to deduct the difference between the correct amount and the recorded amount, which is $482 - $428 = $54.
Therefore, the appropriate treatment on the bank reconciliation would be to deduct $54 from the adjusted balance to account for the error in recording the check amount on the company's books.