Bank Reconciliation Identify each of the following reconciling items as: a. Addition to the cash balance according to the bank statement b. Deduction from the cash balance according to the bank statement c. Addition to the cash balance according to the company's records d. Deduction from the cash balance according to the company's records. (None of the transactions reported by bank debit and credit memos have been recorded by the company.) Item 1. Bank service charges, $20. Treatment Deduction from the cash balance according to the bank state 2. Check drawn by company for $174 but incorrectly recorded by company as $147. 3. Check for $10 incorrectly charged by bank as $100. 4. Check of a customer returned by bank to company because of insufficient funds, $240. Deduction from the cash balance according to the company's Deduction from the cash balance according to the bank state Deduction from the cash balance according to the bank state 5. Deposit in transit, $2,475. 6. Outstanding checks, $7,385. 7. Note collected by bank, $5,300. Addition to the cash balance according to the bank statemen Deduction from the cash balance according to the company's Addition to the cash balance according to the bank statemen Feedback Check My Work Remember that a bank reconciliation is a record for a specific day rather than a period. Also, keep in mind that deposits in transit are added to the bank statement balance, and outstanding checks are subtracted. Items that come from credit memos like collections of notes or interest by the bank are added to the company cash balance and debit memo items like bank service charges and NSF checks are subtracted from the company's cash balance. Errors should be added or deducted from the bank or company section of the reconciliation depending on the nature of the error. If the bank has made the error, the bank section would be adjusted. If the company has made the error, then the company section would be adjusted.