On May 31,Money Corporation's Cash account showed a balance of $10,000 before the bank reconciliation was prepared.After examining the May bank statement and items included with it,the company's accountant found the following items:
$\begin{array}{lr}
\text { Checks outstanding } & \$ 2,250 \
\text { Deposits outstanding } & 1,900 \
\text { NSF check } & 100 \
\text { Service fees } & 40
\end{array}$
$\text { Error: Money Corp. wrote a check for } \$ 30 \text { but recorded it incorrectly for } \$ 300 \text {. }$
What is the amount of cash that should be reported in the company's balance sheet as of May 31?

Question

On May 31,Money Corporation's Cash account showed a balance of $10,000 before the bank reconciliation was prepared.After examining the May bank statement and items included with it,the company's accountant found the following items: 
$\begin{array}{lr}
\text { Checks outstanding } & \$ 2,250 \
\text { Deposits outstanding } & 1,900 \
\text { NSF check } & 100 \
\text { Service fees } & 40
\end{array}$
$\text { Error: Money Corp. wrote a check for } \$ 30 \text { but recorded it incorrectly for } \$ 300 \text {. }$
What is the amount of cash that should be reported in the company's balance sheet as of May 31?

Quizplus · Accepted Answer

The correct cash balance is calculated by adjusting the book balance for the NSF check, service fees, and the error in recording the check. The NSF check and service fees reduce the balance by $140 ($100 + $40), and correcting the error increases the balance by $270 ($300 - $30). Thus, the adjusted cash balance is $10,000 - $140 + $270 = $10,130.

On May 31,Money Corporation's Cash Account Showed a Balance of $10,000