Question

Alton Co. had a cash balance of $32,300 recorded in its general ledger at the end of the month, prior to receiving its bank statement. Reconciliation of the bank statement reveals the following information:

Bank service charge – $15
Check deposited and returned for insufficient funds check – $120
Deposit recorded in the general ledger as $258 but should be $285
Checks outstanding – $1,800

After reconciling its bank statement, what amount should Alton report as its cash account balance?

Answer 1

$32,432

Step-by-step explanation:

Cash balance per cash book $32,300

Bank service charge (15)

Returned check 120

Correction of Deposit 27

Adjusted cash balance per general ledger 32,432

The bank charge will be recognized as a credit in the cash account. The returned check had been credited before and will be debited back to reverse the earlier treatment.

Additional deposit of $27 will be recognized in the books being the difference between $258 that had been recognized and $285 the actual amount.

The outstanding checks of $1,800 will not be adjusted for as the transactions are valid.