Question

question 5 (5 points)
how would outstanding checks be handled when reconciling the ending cash balance per the bank statement to the correct adjusted cash balance?
they would be added to the balance of the bank statement.
they would be added to the balance per books.
they would be ignored.
they would be subtracted from the balance of the bank statement.

question 6 (5 points)
which item(s) will require a journal entry to update the balance in the cash account?
checks outstanding and deposits in transit
bank service charges, note collected by the bank, and deposits in transit
bank service charges, note collected by the bank, and error made by accounting services
none of the above

Explanation:

Analyze outstanding checks in bank reconciliation

Using the Bank Reconciliation and Adjusted Cash Balance knowledge points, we determine how outstanding checks affect the bank statement balance. Outstanding checks are checks written and recorded by the company but not yet presented to or processed by the bank. Since the bank is unaware of these payments, this amount must be subtracted from the ending cash balance per the bank statement to find the correct adjusted cash balance.

Identify items requiring journal entries

Using the Bank Reconciliation knowledge point, we identify which reconciling items require journal entries. Only items that adjust the book balance (the company's records) require journalizing to update the Cash account. Bank service charges, notes collected by the bank, and accounting errors are not yet recorded on the books, so they require journal entries. Conversely, outstanding checks and deposits in transit adjust the bank statement balance and do not require journal entries.

Answer:

Question 5

• They would be added to the balance of the bank statement.
• They would be added to the balance per books.
• They would be ignored.
• They would be subtracted from the balance of the bank statement. (Correct answer)

Question 6

• Checks outstanding and deposits in transit
• Bank service charges, note collected by the bank, and deposits in transit
• Bank service charges, note collected by the bank, and error made by Accounting Services (Correct answer)
• None of the above