Question

Kelly Company's unadjusted bank balance on May 31 is $9,500. An analysis of the bank statement revealed $1,400 of deposits in transit and $900 of outstanding checks. In addition, the bank statement showed a $200 NSF check. Based on this information, Kelly's true cash balance is

a. $9,000.
b. $9,800.
c. $10,000.
d. $10,200.

Answer 1

The adjusted cash balance of Kelly Company is c. $10,000.

Step-by-step explanation:

The true cash balance of Kelly Company can be calculated by adjusting the unadjusted bank balance. To do this, we need to consider the deposits in transit and outstanding checks that have not yet been recorded by the bank.

To find the adjusted cash balance, we start with the unadjusted bank balance of $9,500 and add the deposits in transit while subtracting the outstanding checks. Deposits in transit increase the cash balance, while outstanding checks decrease it.

Therefore, the adjusted cash balance is $9,500 + $1,400 - $900 = $10,000.