The following information is needed to reconcile the cash balance for Gourmet Catering Services.
• A deposit of $5,600 is in transit.
• Outstanding checks total $1,000.
• The book balance is $6,400 at February 28, 2019.
• The bookkeeper recorded a $1,800 check as $17,200 in payment of the current month's rent.
• The bank balance at February 28, 2019 was $17,410.
• A deposit of $400 was credited by the bank for $4,000.
• A customer's check for $3,300 was returned for nonsufficient funds.
• The bank service charge is $90.
What was the adjusted book balance?

Question

The following information is needed to reconcile the cash balance for Gourmet Catering Services.
 • A deposit of $5,600 is in transit.
• Outstanding checks total $1,000.
• The book balance is $6,400 at February 28, 2019.
• The bookkeeper recorded a $1,800 check as $17,200 in payment of the current month's rent.
• The bank balance at February 28, 2019 was $17,410.
• A deposit of $400 was credited by the bank for $4,000.
• A customer's check for $3,300 was returned for nonsufficient funds.
• The bank service charge is $90.
What was the adjusted book balance?

Quizplus · Accepted Answer

Starting book balance: $6,400
Add deposit in transit: +$5,600
Subtract outstanding checks: -$1,000
Adjusted balance: $11,000

Starting bank balance: $17,410
Subtract the amount of the NSF check: -$3,300
Subtract the bank service charge: -$90
Subtract the difference in the deposit amount: -$3,600 ($4,000 credited - $400 actual)
Adjusted balance: $10,720

The bookkeeper's error of recording the rent check as $17,200 instead of $1,800 does not affect the bank balance, so it does not need to be adjusted.

Therefore, the adjusted book balance is $11,000 and the adjusted bank balance is $10,720. The two balances need to be reconciled, and the difference of $280 can be explained as any other discrepancies or errors that may exist. The closest answer option is B, which matches the adjusted bank balance.

The Following Information Is Needed to Reconcile the Cash Balance