Tavarez Company assembled the following information in completing its July bank reconciliation: balance per bank $15,280; outstanding checks $3,100; deposits in transit $5,000; NSF check $320; bank service charge $100; cash balance per books $17,600.As a result of this reconciliation, Tavarez will

Question

Quizplus · Accepted Answer

The cash balance per books is higher than the balance per bank, so there must be items that have not yet cleared the bank. The outstanding checks and NSF check both reduce the company's cash account, while the deposits in transit increase it. The bank service charge also reduces the company's cash account. Therefore, the adjusted balance per bank is $15,280 - $3,100 - $320 - $100 = $11,760. The cash balance per books of $17,600 must be reduced by the adjustment of $5,840 ($17,600 - $11,760) to match the adjusted balance per bank. This means the company will reduce its cash account by $5,840, so the correct answer is D) reduce its cash account by $420 (the difference between $5,840 and the NSF check of $320).

Tavarez Company Assembled the Following Information in Completing Its July