In preparing a bank reconciliation statement for a business with a substantial bank balance, the appropriate treatment for $870 from a debtor paid directly into the company's bank account is to:
A) add it to the balance as per bank statement.
B) deduct it from the balance as per bank statement.
C) add it to the balance per company records.
D) deduct it from the balance per company records.

Question

Quizplus · Accepted Answer

The correct treatment for the $870 received from the debtor is to add it to the balance per company records. This is because the debtor paid the company directly, meaning that it was not recorded by the bank. As a result, the cash balance in the company's records would be higher than the balance shown on the bank statement. Adding the $870 to the company's records would reconcile the difference between the two balances.

In Preparing a Bank Reconciliation Statement for a Business with a Substantial