Question

The following items appeared on the January 31 bank reconciliations for Kelly Company: Outstanding Checks: $100 • NSF Check: $6 S • Bank Service Charge: $8 . Deposit in Transit: $80 • Error: Deposit by Kelly for $440 was correctly recorded by Kelly, but recorded for $476 by the bank. • Bank collection of Note Receivable for Kelly: $170 The unadjusted January 31 book balance is $3,000. The adjusted cash balance for the January 31 balance sheet is: Select one: O a $2,950 Ob. $2.986 Oc $3,156 Od. $3,084 Oe: $3,192 5 on B of 2.5 estion If bonds are issued at a discount, the stated interest rate is O a higher than the market rate of interest O b. lower than the effective rate of interest O c. lower than the coupon rate O d. the same as the effective rate The payment of a cash dividend previously declared will: Select one: Oa. Increase Total Assets O b. Increase Liabilities Oc Decrease Working Capital Od. Have no impact on Working Capital

Answer 1

The adjusted cash balance for the January 31 balance sheet for Kelly Company is $2,986. To calculate the adjusted cash balance, you need to add the deposit in transit of $80 to the unadjusted book balance of $3,000, giving you a subtotal of $3,080. Then, you need to subtract the outstanding checks of $100 and the bank service charge of $8 to get a subtotal of $2,972. Next, you need to adjust for the error in recording the deposit, which is $36 ($476 - $440). This adjustment is subtracted from the subtotal of $2,972, giving you an adjusted cash balance of $2,936. Finally, you need to subtract the NSF check of $6 and add the bank collection of note receivable for Kelly of $170 to get the adjusted cash balance of $2,986.

As for the second question, if bonds are issued at a discount, the stated interest rate is lower than the market rate of interest.

Regarding the third question, the payment of a cash dividend previously declared will have no impact on working capital.

Step-by-step explanation: