The May bank statement for Accounting Services shows a balance of $6,200, but the balance per books shows a cash balance of $7,680. Other information includes: 1. A check for $190 to pay the electric bill was recorded on the books as $30.
2) Included on the bank statement was a note collected by the bank for $370 plus interest of $30.
3) Checks outstanding totaled $270.
4) Bank service charges were $50.
5) Deposits in transit were $1,880.
The adjusted cash balance at the end of May should be:
A) $9,560.
B) $7,590.
C) $7,140.
D) $7,810.

Question

Quizplus · Accepted Answer

The adjusted cash balance is calculated by starting with the balance per books and making necessary adjustments: 1) Correct the error in recording the electric bill: Add back the $160 undercharged ($190 - $30). 2) Add the note collected by the bank ($370 + $30 interest). 3) Subtract bank service charges ($50). The checks outstanding and deposits in transit adjust the bank statement balance, not the book balance. Therefore, the adjusted book balance is $7,680 + $160 + $400 - $50 = $8,190. However, to find the adjusted cash balance that matches both the bank and the books, we also need to adjust the bank statement balance: Start with the bank statement balance of $6,200, add deposits in transit ($1,880), and subtract checks outstanding ($270). This gives us $7,810, which should match the adjusted book balance for a reconciled cash balance. The discrepancy in the final calculation suggests a misunderstanding in the question's requirements or a mistake in calculation. The correct approach involves adjusting both the book and bank balances with their respective items and finding a common reconciled balance. Given the information and typical reconciliation procedures, the intended final adjusted balance might not align with the provided choices without considering both sets of adjustments.

The May Bank Statement for Accounting Services Shows a Balance