At March 31,Cummins Co.had a balance in its cash account of $10,400.At the end of March the company determined that it had outstanding checks of $900,deposits in transit of $600,a bank service charge of $20,and an NSF check from a customer for $200.The true cash balance at March 31 is:

Question

Quizplus · Accepted Answer

To determine the true cash balance at March 31, we need to make the following adjustments:

1. Deduct outstanding checks of $900 from the balance:

$10,400 - $900 = $9,500

2. Add deposits in transit of $600 to the balance:

$9,500 + $600 = $10,100

3. Deduct the bank service charge of $20 from the balance:

$10,100 - $20 = $10,080

4. Deduct the NSF check from the customer for $200 from the balance:

$10,080 - $200 = $9,880

Therefore, the true cash balance at March 31 is $9,880, which is option D.

Note: The wording of the question is a bit tricky, as it says "At March 31, Cummins Co. had a balance in its cash account of $10,400," which could lead you to think that this is the true cash balance. However, the adjustments need to be made to determine the true cash balance.