Question

A company has a $8,000 cash balance per its books. The bank statement has a balance of $8,450. The bank reconciliation included $800 of deposits-in-transit, $500 of checks outstanding, EFTs of $1,000 were received from customers, a $200 NSF check from a customer, and a $50 bank service charge. Given the following reconciling items, the up-to-date cash balance equals ______.

a) $8,000
b) $8,250
c) $8,350
d) $8,750

Answer 1

To calculate the up-to-date cash balance, we consider the deposits-in-transit, checks outstanding, EFTs received from customers, NSF check, and bank service charge. The up-to-date cash balance is $8,050.

Step-by-step explanation:

To calculate the up-to-date cash balance, we need to consider the reconciling items from the bank reconciliation. The deposits-in-transit are funds that have been received by the company but have not yet been recorded by the bank.

The checks outstanding are checks that have been written by the company but have not yet been cleared by the bank.

The EFTs received from customers are electronic funds transfers that have been received by the company and recorded by the bank.

To calculate the up-to-date cash balance, we start with the cash balance per the books ($8,000) and add the deposits-in-transit ($800) and the EFTs received from customers ($1,000).

We then subtract the checks outstanding ($500), the NSF check ($200), and the bank service charge ($50). The up-to-date cash balance is $8,050.