In a bank reconciliation scenario, what amount should be deducted from the bank statement balance given outstanding checks and corrections?

In a bank reconciliation process, outstanding checks are those that have been issued and recorded in the company's books but have not yet cleared the bank. When performing a bank reconciliation, these outstanding checks must be subtracted from the bank statement balance to arrive at the correct adjusted bank balance.

The correct answer is $505 because this represents the total amount of the outstanding checks that need to be deducted. This amount reflects the checks that have been written out of your account, showing up in your financial records but not yet processed by the bank.

When preparing a bank reconciliation, the purpose is to ensure both the company’s records and the bank's records agree, accounting for any discrepancies such as these outstanding checks. This will allow for a true reflection of available funds in the bank account and prevent overdrawing the account.

The other amounts presented, while they may represent different outstanding checks or corrections, do not accurately reflect the total amount of outstanding checks that should be accounted for in this particular reconciliation scenario. By focusing on the correct outstanding check amount of $505, one can properly reconcile the bank statement and maintain accurate financial records.