While preparing the February 28th bank reconciliation for the checking account for Willow, Inc., the accountant identified the following items: In addition, Willow made an error in recording a customer's check; the amount was recorded in cash receipts as $150, while the bank correctly recorded the amount as $510. What amount will Willow report as its actual cash balance on February 28th?

Question

While preparing the February 28th bank reconciliation for the checking account for Willow, Inc., the accountant identified the following items:  In addition, Willow made an error in recording a customer's check; the amount was recorded in cash receipts as $150, while the bank correctly recorded the amount as $510. What amount will Willow report as its actual cash balance on February 28th?

Quizplus · Accepted Answer

Starting cash balance (per company records) = $43,680
Add: Deposits in transit = $2,320
Total = $46,000

Starting cash balance (per bank statement) = $42,910
Add: Deposits not recorded by bank = $10,080
Corrected bank balance = $53,010

Total company cash balance = $46,000
Less: Outstanding checks = $1,890
Less: Bank service charge = $10
Corrected company balance = $44,100

However, there is an error in recording a customer's check. This needs to be adjusted.
Recorded amount = $150
Actual amount = $510
Difference = $360

Adjusted company balance = $44,100 + $360 = $44,460

Therefore, Willow, Inc. will report an actual cash balance of $46,110. (Option C)

While Preparing the February 28th Bank Reconciliation for the Checking