X Company used the following items to complete its bank reconciliation for the month of October: ∙ Deposits in transit were $2,500
∙ Outstanding checks totaled $1,100
∙ Bank service charges were $10
∙ The company correctly wrote a check for $192,but mistakenly recorded the check as $129 on its books.The bank cashed the check correctly for $192.
∙ A customer's check for $50 was returned by the bank,NSF
According to the bank statement,the cash balance was $10,000.How much cash should X Company show on its October 31 balance sheet?

Question

Quizplus · Accepted Answer

To determine the correct cash balance for X Company, we need to adjust the cash balance shown on the bank statement for any outstanding items, as well as any errors or fees that may have occurred.

Starting with the balance on the bank statement of $10,000, we add any deposits in transit and subtract any outstanding checks.

$10,000 + $2,500 - $1,100 = $11,400

Next, we need to adjust for the check amount that was recorded incorrectly by X Company. Since the bank recorded the correct amount of $192, this error will only affect X Company's books. We need to add the $63 difference between the recorded amount ($129) and the correct amount ($192) to X Company's cash balance.

$11,400 + $63 = $11,463

Finally, we need to adjust for the NSF check, which means the $50 is no longer available to X Company. We need to subtract the $50 from X Company's cash balance.

$11,463 - $50 = $11,413

Therefore, X Company should show $11,400 on its October 31 balance sheet.

X Company Used the Following Items to Complete Its Bank