In preparing its August 31, 2014 bank reconciliation, Acme Corp. has the following information available. At August 31, 2014, Acme's adjusted cash balance is
A) $20,800.
B) $20,200.
C) $20,100.
D) $18,500.

Question

In preparing its August 31, 2014 bank reconciliation, Acme Corp. has the following information available.  At August 31, 2014, Acme's adjusted cash balance is
A) $20,800. 
B) $20,200. 
C) $20,100. 
D) $18,500.

Quizplus · Accepted Answer

Starting with the bank statement balance of $19,200, we add in deposits in transit of $3,000 and subtract outstanding checks of $2,400, giving us an adjusted bank balance of $19,800. 
Starting with the company's book balance of $20,100, we subtract a bank service charge of $100 and add interest earned of $800, giving us an adjusted book balance of $20,800. 
Since the adjusted book balance is higher than the adjusted bank balance, it is likely that there are some outstanding deposits that have not yet cleared the bank. Therefore, the correct adjusted cash balance at August 31, 2014, is $20,800.

In Preparing Its August 31, 2014 Bank Reconciliation, Acme Corp