Question

Hazelton manufacturing prepares a bank reconciliation at the end of every month. At the end of May, the general ledger checking account showed a balance of $1,450 and the bank statement showed a bank balance of $1,355. Outstanding checks totaled $395 and deposits in transit were $195. The bank statement listed service charges of $75 and NSF checks totaling $220. The corrected cash balance is:

a) $1,480
b) $1,505
c) $1,560
d) $1,635

Answer 1

After adjusting for deposits in transit, outstanding checks, bank service charges, and NSF checks, the corrected cash balance for Hazelton Manufacturing is $1,505.

Step-by-step explanation:

To reconcile Hazelton Manufacturing's general ledger checking account with the bank statement and find the corrected cash balance, we need to account for the outstanding checks, deposits in transit, bank service charges, and NSF checks. We start with the balance per the general ledger and make the necessary adjustments:

• General ledger balance: $1,450
• Add deposits in transit: + $195
• Subtract outstanding checks: - $395
• Subtract bank service charges: - $75
• Subtract NSF checks: - $220

After calculating these adjustments, we arrive at the following equation:

$1,450 + $195 - $395 - $75 - $220 = $1,505

Therefore, the corrected cash balance is $1,505, which corresponds to option (b).