Question

You are doing a bank recon for May, 2011. You have a $2,785 unadjusted ledger cash balance and the following data:

- Outstanding checks: #719 $200, #727 $800, #732 $625
- Deposits in transit $1,200
- Check # 742 for repairs written for $505 but incorrectly recorded as $550
- NSF check for a customer $500
- Bank service charge for May $5
- Balance per bank statement $2750

What dollar amount should be deducted from the balance per books?

Answer 1

To reconcile the balance per books for May 2011, a total of $460 should be deducted from the unadjusted ledger cash balance. This accounts for the NSF check, bank service charge, and the correction for the incorrectly recorded check.

Step-by-step explanation:

If you are doing a bank reconciliation for May 2011, the dollar amount that should be deducted from the balance per books would include several adjustments for the discrepancies noted. You have a $2,785 unadjusted ledger cash balance, and here are the necessary deductions and additions to reconcile the balance per books:

• Incorrectly recorded check #742: the check was written for $505 but recorded as $550. So you need to add back the difference of $45 to the cash balance.
• NSF check: since the customer's check bounced, you need to deduct $500.
• Bank service charge: a fee charged by the bank, another deduction of $5.

The total deductions from the balance per books would be the sum of the NSF check and the bank service charge, and then subtracting the correction for the recording error. So, the calculation would be $500 (NSF check) + $5 (bank service charge) - $45 (correction for check #742) = $460.

Therefore, you would deduct a total of $460 from the unadjusted ledger cash balance to get the adjusted balance per books.