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Interest earned

Question: On April 31st, 2022, Hats LLC has a Cash balance of $800. Over the course of the month, they wrote $10,000 in checks, but $200 of those checks haven’t been processed by CashForDays bank. In addition, $170 out of their $20,000 in cash receipts still needs to be deposited in CashForDays Bank.

However, on their bank statement, it shows a Cash Balance of $850 and includes the following items not yet recorded by the company: a note receivable collected by the bank for $200, interest earned on that note of $20, and a bank service fee of $50. In addition, the bank accidentally charged Hats LLC $50 for a service fee that was meant to be on another customer’s account. Lastly, one of Hats LLC customer’s checks for $100 returned back with non-sufficient funds.

Prepare the bank reconciliation to correct the ending Cash Balance on April 31st, 2022.

This is dealing with interest earned by the company that the bank has recognized, but not yet alerted the company about. Therefore, it must go on the Company's Cash Balance side.

Does this add or subtract from the company's or bank's side of bank reconciliation?

Company's Cash Balance Items

Reconciling ItemDescriptionAdd or Subtract to Cash Balance?
Note collectedBank collects a note on behalf of the company.Add
Interest earnedBank collects interest on behalf of the company.Add
Service feesBank charges company a service fee for bank services.Subtract
NSF checkCompany receives a check, but the account doesn't have sufficient funds to pay the check amount.Subtract
Electronic Funds Transfers (EFTs)Automatic withdrawals from the company's bank account (ex: rent).Subtract
Company errorCompany incorrectly records a transaction amount.Add / Subtract (it depends)

It adds to the Company's Cash Balance! Therefore, we'll place those $20 of interest earned here in the bank reconciliation:

Bank's Cash Balance

Per Bank Statement$850
Deposits outstanding$170
Checks outstanding($200)
Bank error$50
Bank Balance per Reconciliation???

Company's Cash Balance

Per General Ledger$800
Note collected$200
Interest earned$20
??????
Company Balance per Reconciliation???