Question

Beginning balance 3/1/2018 $15,000.00

Total deposits and other credits 7,000.00
Total checks and other debits 6,000.00
Ending balance 3/31/2018 16,000.00
Checks and Debits Deposits and Credits
Check No. Amount Date Amount
1462 $ 1,163.00 March 1 $ 1,000.00
1463 62.00 March 2 1,340.00
1464 1,235.00 March 6 210.00
1465 750.00 March 12 1,940.00
1466 1,111.00 March 17 855.00
1467 964.00 March 22 1,480.00
DM 15.00 CM 175.00
1468 700.00

The following is a list of checks and deposits recorded on the books of Pyle Garage for March 2018:

Date Check No. Amount of Check Date Amount of Deposit
March 1 1463 $ 62.00 March 1 $ 1,340.00
March 5 1464 1,235.00 March 5 210.00
March 6 1465 750.00
March 9 1466 1,111.00 March 10 1,940.00
March 10 1467 964.00
March 14 1468 70.00 March 16 855.00
March 19 1469 1,500.00 March 19 1,480.00
March 28 1470 102.00 March 29 2,000.00

Check no. 1462 was outstanding from February.
A credit memo for collection of accounts receivable was included in the bank statement.
All checks were paid at the correct amount.
The bank statement included a debit memo for service charges.
The February 28 bank reconciliation showed a deposit in transit of $1,000.
Check no. 1468 was for the purchase of equipment.
The unadjusted Cash account balance at March 31 was $16,868.
How the adjustments described above affect the cash account?

Answer 1

The adjusted Cash account balance at March 31 is $17,868.

Step-by-step explanation:

Several adjustments need to be considered to determine the adjusted Cash account balance at March 31.

1. Outstanding Check from February (Check No. 1462): Since Check No. 1462 was outstanding from February, it needs to be subtracted from the unadjusted Cash account balance.

2. Credit Memo for Collection of Accounts Receivable: A credit memo for collection increases the Cash account balance. Therefore, this amount needs to be added.

3. Debit Memo for Service Charges: The bank statement includes a debit memo for service charges, which decreases the Cash account balance. Thus, this amount needs to be subtracted.

4. Deposit in Transit from February 28: The February 28 bank reconciliation showed a deposit in transit of $1,000. Since this deposit is already accounted for in the unadjusted Cash account balance, it does not require further adjustment.

5. Check No. 1468 for the Purchase of Equipment: Check No. 1468, used for the purchase of equipment, needs to be subtracted from the unadjusted Cash account balance.

Now, let's calculate the adjusted Cash account balance:

`\[ \text{Adjusted Cash balance} = \text{Unadjusted Cash balance} + \text{Credit Memo} - \text{Outstanding Check} - \text{Service Charges} - \text{Equipment Purchase} \]`

`\[ \text{Adjusted Cash balance} = $16,868 + $175 - $1,163 - $15 - $700 = $17,868 \]`

Therefore, the adjusted Cash account balance at March 31 is $17,868.