Which one of the following would be the correct entry for the bank reconciliation process?
Understand the Problem
The question asks for the correct accounting entry for a bank reconciliation, specifically related to an incorrect deposit amount recorded in the bank account. It presents several options for resolving the discrepancy between the bank statement and the books.
Answer
Credit the bank account in the General Ledger by R66,600.
Answer for screen readers
The correct entry for the bank reconciliation process is to credit the bank account in the General Ledger by R66,600.
Steps to Solve
- Identify the discrepancy The bank account shows an incorrect deposit of R7,400, while the bank statement shows the correct amount of R74,000. The difference is:
$$ R74,000 - R7,400 = R66,600 $$
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Determine the correct adjustment This discrepancy indicates that the bank account in the books is understated by R66,600. Therefore, an adjustment must be made to reflect the accurate amount.
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Recognize the accounting entry In accounting, to correct an understatement of a bank account, we need to credit the bank account in the General Ledger. The entry should be:
$$ \text{Credit Bank Account} = R66,600 $$
- Select the appropriate option From the options provided, the correct entry to resolve this discrepancy is to:
- Credit the bank account in the General Ledger by R66,600.
The correct entry for the bank reconciliation process is to credit the bank account in the General Ledger by R66,600.
More Information
In accounting, correcting entries are vital for accurate financial reporting. The precise adjustment maintains the integrity of the financial statements and ensures compliance with accounting principles.
Tips
- Confusing debits and credits: Remember that an understatement requires a credit entry to correct.
- Not calculating the exact discrepancy: Always double-check the figures to ensure the correct amount is reconciled.
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