Based on the Following Information, What Amount Would Be Subtracted

question 93

Multiple Choice

Based on the following information, what amount would be subtracted from the bank balance side of the checking account reconciliation? Service charge $12; Outstanding checks $145; Interest $3.50; Deposit in transit $80.

• A) $145.00
• B) $12.00
• C) $157.00
• D) $148.50
• E) $80.00

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Definitions:

Allowance Method

An accounting technique that estimates and prepares for the amount of bad debts customers might not pay.

Direct Write-Off Method

The method of accounting for uncollectible accounts that recognizes the expense only when accounts are judged to be worthless.

Uncollectible Accounts

Funds that a company is unable to collect from its debtors, leading to recognition as a loss.

Direct Write-Off Method

A bookkeeping approach where bad debts are immediately expensed against earnings when they are considered irrecoverable.