The bank statement reported an ending balance of $14,620 after deducting $220 in service charges and an addition of $4,500 for a note collected by the bank on the company's behalf. The company books reported an ending balance of $9,690, and determined that deposits in transit equal $5,600 and outstanding checks equal $6,250.
What is the adjusted cash balance?

Question

Quizplus · Accepted Answer

The adjusted cash balance is calculated by starting with the bank statement balance, then adjusting for items known to the company but not yet reflected in the bank statement. Starting with the bank's reported balance of $14,620, we don't need to adjust for the service charges or the note collected by the bank, as these are already reflected in the bank's balance. We then adjust for the deposits in transit by adding $5,600 and subtract the outstanding checks of $6,250. Therefore, the adjusted cash balance is $14,620 + $5,600 - $6,250 = $13,970.

The Bank Statement Reported an Ending Balance of $14,620 After