Question

3. What is the amount of Cash that should appear on the balance sheet as of June 30?

$

4. Assume that a canceled check for $390 has been incorrectly recorded by the bank as $930. Select how the error would be included in a bank reconciliation and how it should be corrected.

Treatment:

Addition to cash per company’s records

Addition to cash per bank statement

Not included in a bank reconciliation

Deduction from cash per bank statement

Deduction from cash per company’s records

To correct:

Journalize an entry deducting $930 from cash

Request that the bank correct the error

Deduct from the amount of bank service charges

Journalize a correcting entry adding $930 to cash

Journalize an entry deducting $540 from cash

Journalize an entry adding $540 to cash

Answer 1

4

TREATEMENT

Since an extra amount of $540($930-$390) has been deducted by bank due to mistake the treatement would be to add the cash as per bank statement as it will increase cash balance in the bank statement. Hence option b is correct for treatement

To correct

When such a situation happens which is in the hands of the bank then the cancelled check should be presented to the bank and a request should be made to correct the error. Hnece optio b is correct as we caanot pass any entry to correct the error it has to be done by the bank