Linetech Company's bank statement showed an ending balance of $8,000.Items appearing in the bank reconciliation included: outstanding checks,$500;deposits in transit,$1,000;bank service charges,$50;and Driver Company's $250 check erroneously deducted from Linetech's bank account by the bank.What is the correct cash balance at the end of the month?
A)$10,600.
B)$8,750.
C)$8,500.
D)$8,250.

Question

Quizplus · Accepted Answer

The correct cash balance is calculated by adjusting the bank statement ending balance for items that affect the cash account. Starting with the bank statement balance of $8,000, add deposits in transit ($1,000) and the erroneously deducted check ($250), and subtract outstanding checks ($500) and bank service charges ($50). This results in a corrected cash balance of $8,750.

Linetech Company's Bank Statement Showed an Ending Balance of $8,000