The bank reconciliation of XYZ Co. is provided below. Demonstrate the entries needed to update the Cash account in the general ledger by selecting the correct answers below. Bank Statement Balance$2,010Book Balance$2,200Add: Deposit in transit600Add: Note receivable collected by bank100Less: Outstanding checks370Less: Bank service charges60Multiple select question.Debit Note Receivable $100 and credit Cash $100.Debit Bank Service Charge Expense $60 and credit Cash $60.Debit Cash $600 and credit Revenues $600.Debit Cash $100 and credit Note Receivable $100.Debit Miscellaneous Expense $370 and credit Cash $370.
Question
The bank reconciliation of XYZ Co. is provided below. Demonstrate the entries needed to update the Cash account in the general ledger by selecting the correct answers below. Bank Statement Balance2,200Add: Deposit in transit600Add: Note receivable collected by bank100Less: Outstanding checks370Less: Bank service charges60Multiple select question.Debit Note Receivable 100.Debit Bank Service Charge Expense 60.Debit Cash 600.Debit Cash 100.Debit Miscellaneous Expense 370.
Solution
The correct entries to update the Cash account in the general ledger would be:
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Debit Bank Service Charge Expense 60. This entry is made to record the bank service charges which are an expense for the company and reduce the cash balance.
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Debit Cash 600. This entry is made to record the deposit in transit. The company has earned the revenue but it has not yet been recorded in the bank statement.
The other options are incorrect because:
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Debit Note Receivable 100. This entry is incorrect because the note receivable was collected by the bank and added to the bank balance, not the book balance. The correct entry would be to debit Cash and credit Note Receivable.
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Debit Cash 100. This entry is incorrect for the same reason as above. The note receivable was collected by the bank and added to the bank balance, not the book balance.
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Debit Miscellaneous Expense 370. This entry is incorrect because the outstanding checks are not an expense for the company. They are a reduction in the bank balance, not the book balance. The correct entry would be to debit Accounts Payable and credit Cash.
Similar Questions
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