Question

The accounting records for Butler Company showed an unadjusted book balance of $1,500. There were $400 of accounts receivable collections, $300 of outstanding checks, $200 NSF check, and a bank service charges of $100. Based on this information, the company's true cash balance is ______.

Answer 1

To reconcile Butler Company's cash balance, we adjust the unadjusted book balance of $1,500 by adding accounts receivable collections and subtracting outstanding checks, NSF checks, and bank service charges. The true cash balance calculated this way amounts to $1,300.

Step-by-step explanation:

The student's question pertains to reconciling the cash balance for Butler Company. Reconciling involves adjusting the unadjusted book balance to reflect accurate cash transactions, which leads us to the company's true cash balance.

Starting with the unadjusted book balance of $1,500, we make the following adjustments:

The adjusted calculation is:

$1,500 (unadjusted balance)
+ $400 (accounts receivable collections)
- $300 (outstanding checks)
- $200 (NSF check)
- $100 (bank service charge)
= $1,300 (true cash balance)

Therefore, the company's true cash balance is $1,300.