Use the following data to answer the question presented below for Raines Corp.'s preparation of a bank reconciliation on October 31, 2016: ? $$\begin{array} { l r }
\text { Bank statement balance } & \$ 30,700 \
\text { Raines' book balance (before adjustments) } & ? \
\text { Outstanding checks } & 4,200 \
\text { NSF checks } & 400 \
\text { Service charges } & 300 \
\text { Deposits in transit } & 3,100 \
\text { Interest earned on checking account } & 100
\end{array}$$ ?
What is the net amount of the increase or decrease in Raines' cash balance which must be recorded as a result of the adjustments identified by the bank reconciliation?
A) $100 decrease
B) $300 decrease
C) $400 decrease
D) $600 decrease

Question

Use the following data to answer the question presented below for Raines Corp.'s preparation of a bank reconciliation on October 31, 2016: ? $$\begin{array} { l r } 
\text { Bank statement balance } & \$ 30,700 \
\text { Raines' book balance (before adjustments) } & ? \
\text { Outstanding checks } & 4,200 \
\text { NSF checks } & 400 \
\text { Service charges } & 300 \
\text { Deposits in transit } & 3,100 \
\text { Interest earned on checking account } & 100
\end{array}$$ ?
What is the net amount of the increase or decrease in Raines' cash balance which must be recorded as a result of the adjustments identified by the bank reconciliation?
A) $100 decrease
B) $300 decrease
C) $400 decrease
D) $600 decrease

Quizplus · Accepted Answer

The net amount of the decrease in Raines' cash balance is calculated by considering the NSF checks ($400) and service charges ($300) which decrease the balance, and the interest earned ($100) which increases the balance. The net decrease is $400 + $300 - $100 = $600.

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