The bank statement ending balance is $45 lower than the general ledger bank balance. On the bank statement, there is a line item for bank charges and fees of $45.

How should the adjustment be recorded in the general ledger?

1. Debit Bank fee expense$45 and Credit bank account $45

2. Debit bank account $45 and Credit bank fees expense $45

3. Debit retained earnings $45 and Credit bank account $45

4. Debits bank fees expense $45 and Credit retained earnings $45

5. Debit bank account $45 and Credit retained earnings $45

Question

Business

Tiara Best

18 August, 08:37

The bank statement ending balance is $45 lower than the general ledger bank balance. On the bank statement, there is a line item for bank charges and fees of $45.

How should the adjustment be recorded in the general ledger?

1. Debit Bank fee expense$45 and Credit bank account $45

2. Debit bank account $45 and Credit bank fees expense $45

3. Debit retained earnings $45 and Credit bank account $45

4. Debits bank fees expense $45 and Credit retained earnings $45

5. Debit bank account $45 and Credit retained earnings $45

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Answers (2)

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Tatiana Wilkins · Answer 1

The adjustment should be recorded in the general ledger as : 1. Debit Bank fee expense$45 and Credit bank account $45

Explanation:

The Cash Book Bank Balance and Balance on the Bank Statement sometimes do not balance because of Unrecorded Items

The bank charges and fees of $45 represent an item recorded in by the Bank in the Bank Statement but not recorded in the Cash Book.

Thus the adjustment for this is to decrease the Cash Book - Bank Balance and recognise an expense in the Income statement related to these Bank Charges.