In preparing its bank reconciliation for the month of March 2001,a company has available the following information: What should be the correct balance of cash at March 31,2001?

Question

In preparing its bank reconciliation for the month of March 2001,a company has available the following information:  What should be the correct balance of cash at March 31,2001?

Quizplus · Accepted Answer

To find the correct balance of cash at March 31, 2001, we need to add the deposits in transit to the adjusted bank balance and deduct the outstanding checks from it.

Adjusted Bank Balance: 
Balance per bank statement on March 31, 2001 = $35,000 
Add: Deposits in Transit = $3,000 
Adjusted Bank Balance = $38,000

Adjusted Book Balance: 
Balance per books on March 31, 2001 = $37,500 
Deduct: Outstanding checks = $1,200 
Adjusted Book Balance = $36,300

Finally, we need to compare the adjusted bank balance with the adjusted book balance. If they match, it means we have found the correct balance of cash at March 31, 2001, which is $36,300 in this case. So the best choice is C).

In Preparing Its Bank Reconciliation for the Month of March