What is the typical result when John overdraws his checking account during the bank reconciliation process?

• A. John receives interest income on the overdrawn amount.
• B. A bank service charge or overdraft fee is assessed to his account.
• C. The overdraft is ignored and not reflected in the bank statement.
• D. The bank automatically increases his account balance.

Answer: (B)

Verified step by step guidance

1. Understand the concept of overdrawing a checking account: Overdrawing occurs when the account holder withdraws more money than is available in their account balance.
2. Review the typical bank response to overdrafts: Banks usually assess a service charge or overdraft fee to the account holder for exceeding their available balance.
3. Analyze the options provided in the problem: Evaluate each statement to determine which aligns with standard banking practices during the reconciliation process.
4. Eliminate incorrect options: For example, banks do not typically provide interest income on overdrawn amounts, ignore overdrafts, or automatically increase the account balance.
5. Conclude that the correct response is that a bank service charge or overdraft fee is assessed to John's account, as this reflects standard banking procedures.