Timing differences : When accounting records are maintained by both bank and business, time interval occurs and thus cash differences occur between cash amount in the bank statement and the cash account in the company books. These time intervals are referred as timing differences. To identify: The timing differences related to book side or the bank side of bank reconciliation.

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. Is it an Is book or bank addition or Timing difference affected? subtraction? a. Deposit in transit b. Bank collection c. Debit memorandum from bank 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 $250 j. Credit memorandum from bank

Answer 1

Question

Chapter 7, Problem 7.8SE

To determine

Timing differences: When accounting records are maintained by both bank and business, time interval occurs and thus cash differences occur between cash amount in the bank statement and the cash account in the company books. These time intervals are referred as timing differences.

To identify: The timing differences related to book side or the bank side of bank reconciliation.

Expert Solution & Answer

Trending nowThis is a popular solution!

See solution

Check out sample textbook solution

Students have asked these similar questions

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. Is it an Is book or bank addition or Timing difference affected? subtraction? a. Deposit in transit b. Bank collection c. Debit memorandum from bank 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 $250 j. Credit memorandum from bank

Which of the following must be deducted from the bank statement balance in preparing a bank reconciliation which ends with an adjusted cash balance? a. Reduction of the loan charged to the account of depositor b. Outstanding checks c. Deposit in transit d. Certified checks

For each of the items indicate whether its amount affects the bank or book side of a bank reconciliation and is an addition or a subtraction in a bank reconciliation and whether a journal entry is required: Items a. Minimum balance bank fee b. Bank collected note receivable on behalf of depositor c. Outstanding check written to supplier d. Bank maintenance fee e. Bank service charges f. Deposits in transit g. Interest on cash balance Bank or Book side Addition or Subtraction Entry required or Not