Apple Company's bank statement showed an ending balance of $5,000.Items appearing in the bank reconciliation included: outstanding cheques,$500; deposits in transit,$1,000; bank service charges,$10; and Orange Company's cheque erroneously charged to Apple's bank account by the bank,$110.What is the correct cash balance at the end of the month?

Question

Quizplus · Accepted Answer

To calculate the correct cash balance at the end of the month, we need to adjust the ending balance on the bank statement by adding deposits in transit and deducting outstanding cheques. We also need to adjust for any errors or bank charges that do not appear on the bank statement. 
Starting with the ending balance on the bank statement ($5,000), add deposits in transit ($1,000) to get a subtotal of $6,000. Then, deduct outstanding cheques ($500) to get a new subtotal of $5,500. 
Next, deduct the bank service charges ($10) to get $5,490, and then add back the erroneously charged cheque from Orange Company ($110) to get a final corrected balance of $5,600. 
So, the correct answer is C) $5,610.

Apple Company's Bank Statement Showed an Ending Balance of $5,000