data co. has asked you to assist in the preparation of a bank reconciliation at the end of july. answer…

data co. has asked you to assist in the preparation of a bank reconciliation at the end of july. answer questions 1 - 3 using the following code letters to indicate how the item described would be reported on the bank reconciliation. a. add to the bank statement balance. b. deduct from the bank statement balance. c. add to the book balance. d. deduct from the book balance. e. doesnt belong on the bank reconciliation. 1. ____ note and interest collected by the bank for the company, $500 (plus $25 interest). 2. ____ deposit in transit, $400. 3. ____ check number 662 written for $730 was incorrectly recorded by the bank as $370.

data co. has asked you to assist in the preparation of a bank reconciliation at the end of july. answer questions 1 - 3 using the following code letters to indicate how the item described would be reported on the bank reconciliation. a. add to the bank statement balance. b. deduct from the bank statement balance. c. add to the book balance. d. deduct from the book balance. e. doesnt belong on the bank reconciliation. 1. ____ note and interest collected by the bank for the company, $500 (plus $25 interest). 2. ____ deposit in transit, $400. 3. ____ check number 662 written for $730 was incorrectly recorded by the bank as $370.

Answer

Explanation:

Step1: Analyze item 1

The bank has collected a note and interest for the company. This amount is already in the bank account but not yet recorded in the company's books. So, it should be added to the book balance.

Step2: Analyze item 2

A deposit in transit is a deposit made by the company but not yet reflected on the bank statement. So, it should be added to the bank statement balance.

Step3: Analyze item 3

The bank has under - recorded a check amount. The correct amount is higher than what the bank has recorded. So, the difference should be deducted from the bank statement balance.

Answer:

  1. c. Add to the book balance.
  2. a. Add to the bank statement balance.
  3. b. Deduct from the bank statement balance.