Which of the following items would require a journal entry during the bank reconciliation process?

• A. Errors made by the bank in recording transactions
• B. Deposits in transit at month-end
• C. Outstanding checks at month-end
• D. Bank service charges identified on the bank statement

Answer: (D)

Verified step by step guidance

1. Understand the purpose of a bank reconciliation: It is a process to ensure that the company's cash records match the bank's records, identifying discrepancies such as errors, timing differences, or unrecorded transactions.
2. Review each item listed in the problem to determine whether it requires a journal entry. For example, errors made by the bank in recording transactions do not require a journal entry because they are corrected by the bank, not the company.
3. Analyze deposits in transit at month-end: These are amounts already recorded in the company's books but not yet reflected in the bank statement. Since they are already accounted for, no journal entry is needed.
4. Evaluate outstanding checks at month-end: These are checks issued by the company but not yet cleared by the bank. They are already recorded in the company's books, so no journal entry is required.
5. Identify bank service charges on the bank statement: These are fees charged by the bank that the company may not have recorded yet. A journal entry is required to account for these charges in the company's books, typically debiting an expense account and crediting cash.