Question

Using the following information, calculate the adjusted cash balance at the end of April.

Bank statement ending cash balance $2,000
General ledger cash balance ending 3,250
Bank monthly service charge 45
Deposits in transit 2,500
Outstanding checks 1,500
NSF check returned with bank statement 205
A.4,000
B.5,500
C.4,250
D.3,000

Answer 1

D... not real sure, get another opinion on answer

Answer 2

The correct option is D. 3,000

Explanation:

• On the bank statement, compare the issued checks and deposits shown on the statement to identify uncleared checks and deposits in transit

Step 1 : Using the cash balance shown on the bank statement, add back any deposits in transit. : 2000 + 2500 = $4500

Step 2 : Deduct any outstanding checks : 4500 - 1500 = $3000

This will provide the adjusted bank cash balance.

• Next, use the company’s ending cash balance, add any interest earned and notes receivable amount.

Step 3 : Deduct any bank service fees, penalties, and NSF checks. This will arrive at the adjusted company cash balance : 3250 - (205 + 45) = $3000

After reconciliation, the adjusted bank balance should match with the company’s ending adjusted cash balance.

So, the adjusted cash balance at the end of April is $3000