The following information is available for Ellen's Fashions Company for the current month. $$\begin{array} { | l | r | }
\hline \text { Book balance end of month } & \$ 7,000 \
\hline \text { Outstanding checks } & 725 \
\hline \text { Deposits in transit } & 4,000 \
\hline \text { Service charges } & 80 \
\hline \text { Interest revenue } & 45 \
\hline
\end{array}$$ What is the adjusted book balance on the bank reconciliation?
A) $10,150
B) $7,690
C) $6,875
D) $6,965

Question

The following information is available for Ellen's Fashions Company for the current month. $$\begin{array} { | l | r | } 
\hline \text { Book balance end of month } & \$ 7,000 \
\hline \text { Outstanding checks } & 725 \
\hline \text { Deposits in transit } & 4,000 \
\hline \text { Service charges } & 80 \
\hline \text { Interest revenue } & 45 \
\hline
\end{array}$$ What is the adjusted book balance on the bank reconciliation?
A) $10,150
B) $7,690
C) $6,875
D) $6,965

Quizplus · Accepted Answer

The adjusted book balance is calculated by starting with the book balance at the end of the month, then adding any interest revenue, and subtracting any service charges. Therefore, the calculation is $7,000 + $45 - $80 = $6,965. Outstanding checks and deposits in transit are adjustments on the bank side, not the book balance.

The Following Information Is Available for Ellen's Fashions Company for the Current