While reconciling the checking account, an accountant with Elliter, Inc. noticed that an error had been made in recording a check received by the company. Elliter recorded the receipt as $729 and the correct amount of the check was $279. Which of the following reconciling adjustments is necessary?
A) Add $450 to the company's records.
B) Deduct $450 from the company's records.
C) Add $450 to the bank statement balance.
D) Deduct $450 from the bank statement balance.

Question

Quizplus · Accepted Answer

Since Elliter recorded the receipt as $729 instead of the correct amount of $279, they have overstated their cash account by $450. This means that the correct entry should be to deduct $450 from the company's records. Therefore, the necessary reconciling adjustment is to deduct $450 from the company's records, which is option B.

While Reconciling the Checking Account, an Accountant with Elliter, Inc