Question

Hector Company gathered the following reconciling information in preparing its March bank reconciliation:

Cash balance per books, on 3/31 $12,000
Note receivable collected by bank 6,000
Outstanding checks 9,000
Deposits in transit 4,500
Bank service charge 75
NSF check 1,200
Using the above information, what is the adjusted cash balance for March?
a. $16,725
b. $12,225
c. $7,500
d. $15,500

Answer 1

b) $12,225

Step-by-step explanation:

Note: The following transactions have not been considered.

Balance as per books = $12,000

Notes Receivable collected by bank shall be added as not recorded in books

Balance = $12,000 + $6,000 = $18,000

Outstanding checks = $9,000 which is not yet cashed therefore such balance shall be deducted = $18,000 - $9,000 = $9,000 Balance

Deposits in transit, which means these deposits are still not added by bank made by us, therefore let us reverse and add them back then balance = $9,000 + $4,500 = $13,500

Bank service charge has been deducted by bank but not in books such shall be deducted = $13,500 - $75 = $13,425 = Balance

Check declared NSF not recorded shall be deducted, thus balance = $13,425 - $1,200 = $12,225

Correct option is

b) $12,225