Question

McDermott Company's bank statement for September 30 showed an ending cash balance of 1,350. The company's Cash account in its general ledger showed a debit balance of 995. The following information was also available as of September 30. The bank deducted 125 for an NSF check from a customer deposited on September 15. The September 30 cash receipts of 1,250 were placed in the bank's night depository after banking hours on that date and this amount did not appear on the September 30 bank statement. A 15 debit memorandum for checks printed by the bank was included with the canceled checks. Outstanding checks amounted to 1,145. Included with the bank statement was a credit memo in the amount of 875 for an EFT in payment of a customer's account. Included with the canceled checks was a check for 275, drawn on the account of another company. What is the adjusted cash balance for McDermott Company as of September 30?

Answer 1

The adjusted cash balance for McDermott Company as of September 30, accounting for all the relevant transactions, is $1,355. This is derived from reconciling both the ledger balance and the bank statement balance while adjusting for items like NSF checks, printed check fees, outstanding checks, misposted checks, and EFT payments.

Step-by-step explanation:

The adjusted cash balance for McDermott Company as of September 30 can be determined by reconciling the company's general ledger against the bank statement while considering the additional information provided. First, we shall address the differences between the bank statement and the company's ledger before adjusting for any additional transactions.

To begin, we note the ending cash balance on the bank statement is $1,350, and the ledger shows a debit balance of $995. We then adjust the ledger balance for the following items:

Since the ledger reflects transactions not yet processed by the bank (outstanding checks), the adjusted cash balance that McDermott Company should report on its financial statements for September 30 is the adjusted bank statement balance of $1,355.