(Understanding the bank reconciliation, LO 1) A new accounting clerk for Everell Ltd. (Everell) has been asked to prepare a preliminary bank reconciliation for the current month. The clerk is having some trouble with some of the items. Indicate whether each of the following items would be added to or‘subtracted from the entity’s cash account, or added to or subtracted from the balance on the bank statement when preparing a bank reconciliation. Also indicate if any of the items should not be included in the bank reconciliation. Explain each of your choices.

a. Interest was withdrawn from Everell’s account to cover the monthly interest cost of the company’s bank loan. The amount was not accrued in the accounting records.

b. Several cheques that Everell had written and mailed had not yet been cashed.

c. The bank made an error by depositing money to Everell’s bank account that should have been deposited to another company’s account.

d. Late in the month, Everell deposited money to its bank account through a bank machine, but the amount was not recorded by the bank until the next month.

e. An automatic withdrawal was made from Everell’s bank account to cover a monthly utility charge. The withdrawal was not recorded in the accounting records.

f. An automatic withdrawal was made from Everell’s bank account to cover a monthly insurance charge. The withdrawal was recorded in the accounting records.

g. Cheques were returned by the bank because the entities that gave the cheques to Everell did not have enough money in their bank accounts to cover them.

h. The bank deducted its monthly service charge from the account.

i. Fifty cheques were written during the month and mailed and recorded in the accounting system. All of these cheques were cashed by the bank.