In preparing a bank reconciliation statement for a business with a substantial bank balance,the appropriate treatment for a customer's cheque for $85 that was returned because of insufficient funds 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 appropriate treatment for a customer's cheque that was returned due to insufficient funds is to deduct it from the balance per company records, as the business's records would have recorded the customer's cheque as a receivable. This adjustment will help to adjust the bank balance with the actual balance.

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