On a bank reconciliation, a bank fee for check printing not yet recorded by the company is:

• A. added to the company's book balance
• B. added to the bank statement balance
• C. deducted from the company's book balance
• D. deducted from the bank statement balance

Answer: (C)

Verified step by step guidance

1. Understand the concept of a bank reconciliation: It is a process used to compare the company's book balance (cash account) with the bank statement balance to identify discrepancies and make adjustments.
2. Identify the nature of the transaction: A bank fee for check printing is an expense incurred by the company but not yet recorded in the company's books.
3. Determine the impact on the company's book balance: Since the fee represents a reduction in cash, it must be deducted from the company's book balance to reflect the correct cash position.
4. Recognize that the bank statement balance already includes the fee: The bank has already deducted the fee from the account, so no adjustment is needed to the bank statement balance.
5. Record the adjustment in the company's books: Deduct the fee from the company's book balance by creating a journal entry that debits the expense account (e.g., 'Bank Fees') and credits the cash account.