At May 31,Allegro Company had a general ledger cash balance of $7,400.At the end of May,the bank statement had a balance of $7,500.Deposits in transit amounted to $1,000 and there was a service charge of $10.Outstanding checks totaled $1,110.What is the correct amount of cash?
A)$7,390
B)$7,000
C)$6,390
D)$6,380

Question

Quizplus · Accepted Answer

- Starting balance per company's general ledger: $7,400
- Add deposits in transit: $1,000
- Adjust for outstanding checks: -$1,110 (subtract)
- Adjust for service charge: -$10 (subtract)
- Bank statement balance: $7,500
- Reconciled balance: $7,400 + $1,000 - $1,110 - $10 = $7,280
- Adjusted balance (bank statement balance + or - any reconciling items): $7,500
- Difference (adjusted balance - reconciled balance): $7,500 - $7,280 = $220
- This difference represents other adjustments/transactions that need to be investigated and resolved.
- Therefore, the correct amount of cash is the reconciled balance of $7,280.

At May 31,Allegro Company Had a General Ledger Cash Balance