Brockton Carpet Cleaning prepares a bank reconciliation at the end of every month. At the end of July, the balance in the general ledger checking account was $2,750 and the bank balance on the bank statement was $2,980. Outstanding checks totaled $680 and deposits in transited were $400. The bank statement revealed that a check written for $120 was incorrectly recorded by Brockton as a $220 disbursement. The bank statement listed service charges and NSF check charges totaling $150. The corrected cash balance is:

Question

Quizplus · Accepted Answer

The corrected cash balance is calculated as follows:

Starting Balance: $2,750
Add: Deposits in Transit: $400
Adjusted Bank Balance: $3,150

Subtract: Outstanding Checks: $680
Adjusted Bank Balance after Subtraction: $2,470

Add: Correction for Incorrect Recording: $100
Adjusted Bank Balance after Correction: $2,570

Subtract: Service Charges and NSF Check Charges: $150
Final Adjusted Cash Balance: $2,420

Therefore, the corrected cash balance is $2,420, which is closest to option D) $2,700.

Brockton Carpet Cleaning Prepares a Bank Reconciliation at the End