Reconciling the insurance escrow account

Reference no: EM133650415

Question

Bank reconciliation question. Company ABC has an cash restricted insurance escrow account held by lender.

As of 12/31/2022, the insurance escrow account's book balance is $157,096.11. The account's statement balance as of 12/31/2022 is $130,126.15. On 12/28/2022, there was a disbursement of $26,969.96 from the escrow account at the request of Company ABC to reimburse their recent insurance payment for 2023. This reimbursement payment was issued by the lender as a check and Company ABC didn't receive it within 2022 to book a deposit journal entry. This check is expected to arrive in early January of 2023.

You are now reconciling the insurance escrow account as of 12/31/2022. How would you reconcile the bank and book balances? What would be the reconciled balance? And would the disbursement amount of $26,969.96 be a reconciling item on the bank side or on the book side? What description would you use to describe it as a reconciling item?

Reference no: EM133650415

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