On October 31, 2010, the bank's records say that your company has $12,956.73 in its checking account. You are aware of three outstanding checks for a total of $2,112.19. During October, 2010, the bank rejected two deposited checks from customers totaling $654.19 because of insufficient funds and charged you $12.00 in service fees. You had not yet received notice about the bad checks, but you were aware of and have recorded the $12.00 of service fees. Prior to adjustment on October 31, 2010, your Cash account would have a balance of:

Question

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Starting balance: $12,956.73
Less outstanding checks: $2,112.19
Adjusted balance: $10,844.54

However, there were two deposited checks that were rejected totaling $654.19, which means the adjusted balance should be decreased by that amount to account for the fact that the funds were not received:

Adjusted balance: $10,190.35

Finally, there was a service fee of $12.00 that was recorded, meaning the adjusted balance should be decreased by that amount:

Adjusted balance: $10,178.35

Therefore, prior to adjustment on October 31, 2010, the Cash account would have a balance of $11,498.73 (starting balance of $12,956.73 minus outstanding checks of $2,112.19).

On October 31, 2010, the Bank's Records Say That Your