For Each of the Following Items, Indicate Whether It Is

question 46

Essay

For each of the following items, indicate whether it is an adjustment to the bank side, the book side, or not applicable when preparing a bank reconciliation. For each adjustment item, indicate whether the amount would be added or subtracted. $$\begin{array} { | l | l | l | } \hline \text { Item } & \begin{array} { l } \text { Bank } \\\text { Balance }\end{array} & \begin{array} { l } \text { Book } \\\text { Balance }\end{array} \\\hline \text { Deposit in transit } & & \\\hline \text { Debit memo } & & \\\hline \text { Outstanding check } & & \\\hline \text { NSF check } & & \\\hline \begin{array} { l } \text { Error in recording a check on the books } \\\text { (check was written for } \$ 35 \text { but recorded as } \\\text { \$53) }\end{array} & & \\\hline \text { Service charge } & & \\\hline \text { Interest earned on the account } & & \\\hline\end{array}$$

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Definitions:

Accounts Written Off

This refers to the process where businesses remove uncollectible accounts receivable from their accounting records because payment is no longer expected.

Note Dishonored

A promissory note that has not been paid by the issuer at maturity.

Allowance for Doubtful Accounts

An accounting provision made for accounts receivable that might not be collected, representing a business's estimate of noncollectable amounts.

Accounts Receivable

Accounts receivable represents money owed to a company by its customers for goods or services provided on credit.