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 $1,510 and the bank statement showed a bank balance of $1,295. Outstanding checks totaled $425 and deposits in transit were $225. The bank statement listed service charges of $105 and NSF checks totaling $310. The corrected cash balance is:

a. $1,160.
b. $1,130.
c. $1,245.
d. $1,445.

Answer 1

A bank reconciliation by Hazelton Manufacturing results in a corrected cash balance of $895 after accounting for deposits in transit, outstanding checks, bank service charges, and NSF checks.

The general ledger balance is $1,510, to which we add deposits in transit of $180.

We then deduct outstanding checks of $380 and bank service charges of $60. The final step is to subtract NSF (non-sufficient funds) checks of $175. The result is the corrected cash balance.

Therefore, the computation process will be as follows:

Add the deposits in transit to the book balance ($1,510 + $225 = $1,735).

Subtract outstanding checks from the sum above ($1,735 - $425 = $1,310).

Subtract the bank service charges ($1,310 - $105 = $1,205).

Lastly, subtract NSF checks ($1,205 - $310 = $895).

The corrected cash balance is thus $985.