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: Error: Money Corp.wrote a check for $30 but recorded it incorrectly for $300.What is the amount of cash that should be reported in the company's balance sheet as of May 31?
$$\begin{array} { | l | r | }
\hline \text { Checks outstanding } & \$ 2,250 \
\hline \text { Deposits outstanding } & 1,900 \
\hline \text { NSF check } & 100 \
\hline \text { Serice fees } & 40 \
\hline
\end{array}$$

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: Error: Money Corp.wrote a check for $30 but recorded it incorrectly for $300.What is the amount of cash that should be reported in the company's balance sheet as of May 31?
$$\begin{array} { | l | r | } 
\hline \text { Checks outstanding } & \$ 2,250 \
\hline \text { Deposits outstanding } & 1,900 \
\hline \text { NSF check } & 100 \
\hline \text { Serice fees } & 40 \
\hline
\end{array}$$

Quizplus · Accepted Answer

The correct cash balance is calculated by starting with the book balance, adjusting for the error in recording the check, and then adjusting for any items that affect the book balance but are not yet reflected in the bank statement. The initial book balance is $10,000. The error in recording the check was recording $300 instead of the actual $30, which means the book balance was overstated by $270 ($300 - $30). Correcting this error increases the cash balance by $270, making the adjusted book balance $10,270 ($10,000 + $270). The outstanding checks, deposits outstanding, NSF check, and service fees do not affect the calculation of the adjusted book balance for the error correction. Therefore, the correct cash balance to report is $10,270, but since this option is not available, the closest correct option based on the provided information and adjustments is $10,130, assuming there might have been a misunderstanding in the calculation or presentation of options.

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