The May bank statement for Lawn Services shows a balance of $6,300, but the balance per books shows a cash balance of $7,980. Other information includes 1. A cheque for $200 to pay the electric bill was recorded incorrectly on the books as $20.
2) Included on the bank statement was a note collected by the bank for $300 plus interest of $30.
3) Cheques outstanding totaled $360.
4) Bank service charges were $50.
5) Deposits in transit were $2,140.
The adjusted cash balance at the end of May should be
A) $9,810.
B) $7,620.
C) $7,980.
D) $8,080.

Question

Quizplus · Accepted Answer

To find the adjusted cash balance, we need to reconcile the balance per books and the balance per bank statement. Starting with the balance per books ($7,980):1. Correct the error in recording the electric bill: Add back the $180 that was under-recorded ($200 - $20).2. Add the note collected by the bank, including interest: $300 + $30 = $330.3. Subtract bank service charges: -$50.Adjusted book balance = $7,980 + $180 + $330 - $50 = $8,440.For the bank statement balance ($6,300):1. Add deposits in transit: $2,140.2. Subtract outstanding checks: -$360.Adjusted bank balance = $6,300 + $2,140 - $360 = $8,080.The correct adjusted cash balance, which should match from both perspectives after adjustments, is $8,080.

The May Bank Statement for Lawn Services Shows a Balance