At the end of the month, Grant Entertainment Company showed a $9,300 book balance in its cash account. The following information was gathered by studying the bank statement and the company's cash records:
(1) deposits in transit amounted to $3,150
(2) outstanding checks were $6,200
(3) a $550 check had been incorrectly drawn on Grant's account by the bank
(4) NSF checks returned by the bank were $750
(5) bank service charge was $29
(6) credit memo for $75 for the collection of one of the company's account receivable
Based on the above information the true cash balance would be:

Question

Quizplus · Accepted Answer

Starting with the book balance of $9,300, we add deposits in transit of $3,150 and subtract outstanding checks of $6,200 to get an adjusted balance of $6,250.

However, we also need to consider the other adjustments:

- The incorrectly drawn check reduces the balance by $550. 
- The NSF checks returned by the bank further reduce the balance by $750. 
- The bank service charge reduces the balance by $29. 
- The credit memo for $75 increases the balance by $75.

Taking all of these adjustments into account, the true cash balance is:

$6,250 - $550 - $750 - $29 + $75 = $8,596

Therefore, the best choice is B.

At the End of the Month, Grant Entertainment Company Showed