According to its August 31 bank statement,X Co's bank account held $10,000.Deposits in transit were $3,000; outstanding checks were $1,000; bank service charges were $10; and a customer's check for $50 was returned NSF.How much cash should X Co report on its August 31 balance sheet?

Question

Quizplus · Accepted Answer

To calculate the correct cash balance for the balance sheet, start with the bank statement balance of $10,000, add deposits in transit ($3,000), subtract outstanding checks ($1,000), subtract bank service charges ($10), and subtract the NSF check ($50). This results in $10,000 + $3,000 - $1,000 - $10 - $50 = $11,940, which is not an option provided. The correct calculation should be: $10,000 (bank statement balance) + $3,000 (deposits in transit) - $1,000 (outstanding checks) = $12,000. The error in the explanation was including deductions not required for the reconciliation from the company's perspective (bank service charges and NSF check should be adjusted in the company's books, not in the reconciliation to the bank statement ending balance). The correct cash balance to report is $12,000.

According to Its August 31 Bank Statement,X Co's Bank Account