Question

Rex Company's bank statement shows a $200 NSF check. To determine the true cash balance the

a. amount of the NSF check must be added to the unadjusted bank balance.
b. amount of the NSF check must be subtracted from the unadjusted book balance.
c. amount of the NSF check must be added to the unadjusted book balance.
d. amount of the NSF check must be subtracted from the unadjusted bank balance.

Answer 1

The correct answer is d. amount of the NSF check must be subtracted from the unadjusted bank balance. When a bank statement shows a $200 non-sufficient funds (NSF) check, it means that the check bounced. The bank will deduct the amount of the NSF check from the unadjusted bank balance to determine the true cash balance.

Step-by-step explanation:

The correct answer is d. amount of the NSF check must be subtracted from the unadjusted bank balance.

When a bank statement shows a $200 non-sufficient funds (NSF) check, it means that the check bounced because there were not enough funds in the account to cover it. Therefore, the bank will deduct the amount of the NSF check from the unadjusted bank balance to determine the true cash balance.

For example, if the unadjusted bank balance is $2,000 and there is a $200 NSF check, the true cash balance would be $2,000 - $200 = $1,800.