Question

Hawthorne Company's unadjusted book cash balance at September 30,2022 is $9,700. The company's bank statement revealed a handful of items: The first is bank service charges of $60. Secondly the statement reflects $10 in interest earned on it's checking account. Finally, there's a credit for $1,000 which represents an account receivable collection the bank made for Hawthome. Based on this information. Hawthorne's true cash balance is: a. 9,640 b. None of the above c. 9,650 d. 10.650

Answer 1

Hawthorne's true cash balance is $10,650.

Step-by-step explanation:

To find Hawthorne Company's true cash balance, we need to adjust the unadjusted book cash balance based on the information provided. We start with the unadjusted book cash balance of $9,700. We then subtract the bank service charges of $60, add the interest earned of $10, and add the account receivable collection of $1,000. Calculating these adjustments:

Unadjusted book cash balance: $9,700
Bank service charges: -$60
Interest earned: +$10
Account receivable collection: +$1,000
True cash balance: $9,700 - $60 + $10 + $1,000 = $10,650

Therefore, Hawthorne's true cash balance is $10,650. Option D is the correct answer.