Easton Co. deposits all cash receipts on the day they are received and makes all cash payments by check. At the close of business on June 30, its Cash account shows a debit balance of $60,209. Easton's June bank statement shows $58,349 on deposit in the bank. Determine the adjusted cash balance using the following information: The adjusted cash balance should be:

Question

Easton Co. deposits all cash receipts on the day they are received and makes all cash payments by check. At the close of business on June 30, its Cash account shows a debit balance of $60,209. Easton's June bank statement shows $58,349 on deposit in the bank. Determine the adjusted cash balance using the following information:  The adjusted cash balance should be:

Quizplus · Accepted Answer

The adjusted cash balance can be calculated as follows:
Cash balance per company records = $60,209 
Add: Deposits in transit = $2,015 
(These are the cash receipts that have been recorded by the company but have not yet been deposited in the bank as of June 30) 
Adjusted cash balance per company records = $62,224 
Bank balance per bank statement = $58,349 
Add: Outstanding checks = $1,875 
(These are the checks that have been issued by the company but have not yet been presented for payment as of June 30) 
Adjusted cash balance per bank statement = $60,224 
The adjusted cash balance per company records and per bank statement is different due to timing differences in recording cash transactions. However, once the deposits in transit and outstanding checks are taken into account, the company's and bank's records reconcile and the adjusted cash balance is $60,224. Therefore, the best choice is E.

Easton Co Deposits All Cash Receipts on the Day They Are