On September 30 the bank statement of Fine Company showed a balance of $8,900. The following information was revealed by comparing the bank statement to the cash balance in Fine's accounting records:Deposits in transit amounted to $3,750Outstanding checks amounted to $7,120A $610 check was incorrectly drawn on Fine's accountNSF checks returned by the bank were $890The bank service charge was $33Credit memo for $105 for the collection of one of the company's account receivableWhat is the true cash balance?

Question

Quizplus · Accepted Answer

The true cash balance is $6,140. This is calculated by adding the deposits in transit ($3,750) to the bank statement balance ($8,900), and then subtracting the outstanding checks ($7,120), the NSF checks ($890), and the bank service charge ($33). The credit memo for $105 is not included in this calculation because it represents a collection of an account receivable, which is not a cash transaction.

On September 30 the Bank Statement of Fine Company Showed