Question

The cash account shows a balance of $85,000 before reconciliation. The bank statement does not include a deposit of $4,600 made on the last day of the month. The bank statement shows a collection by the bank of $1,880 and a customer's check for $640 was returned because it was NSF. A customer's check for $900 was recorded on the books as $1,080, and a check written for $158 was recorded as $194. The correct balance in the cash account was

a. $86,024.
b. $86,096.
c. $86,456.
d. $90,696.

Answer 1

The correct balance in the cash account is $86,456, after accounting for the unrecorded deposit, bank collection, NSF check, and record discrepancies.

The correct balance in the cash account after reconciling the mentioned items would be $86,456.

Starting with the original balance of $85,000, we need to add the deposit not recorded by the bank, which is $4,600, giving us $89,600. The collection by the bank of $1,880 is also added since it increases the cash balance. The customer's NSF check for $640 and the check recording error of $180 ($1,080 recorded instead of $900) needs to be subtracted. Finally, we need to correct the check recording error by adding the difference of $36 ($194 recorded instead of $158), resulting in the correct cash balance of $86,456.

By following the standard procedures for bank and book adjustments during a cash reconciliation, we can determine the accurate cash balance for the account.