The June bank statement for Paul's Plumbing shows a balance of $3,150, but the balance per books shows a cash balance of $3,990. Other information includes 1. Cheques outstanding totaled $970.
2) Bank service charges were $25.
3) A cheque for $100 to pay the telephone bill was recorded on the books as $10.
4) Included on the bank statement was an NSF cheque for $150 plus an NSF fee of $15.
5) Deposits in transit were $1,115.
The adjusted cash balance at the end of June should be
A) $4,405.
B) $3,710.
C) $3,990.
D) $4,040.

Question

Quizplus · Accepted Answer

The adjusted cash balance is calculated by reconciling the bank statement and book balance. Starting with the book balance of $3,990, subtract the bank service charges ($25), correct the telephone bill error ($90), and subtract the NSF cheque and fee ($165). This results in an adjusted cash balance of $3,710.

The June Bank Statement for Paul's Plumbing Shows a Balance