Question

The May bank statement for Accounting Services shows a balance of $5,700, but the balance per books shows a cash balance of $7,380. Other information includes: 1. A check for $220 to pay the electric bill was recorded on the books as $10. 2. Included on the bank statement was a note collected by the bank for $430 plus interest of $30 3. Checks outstanding totaled $290. 4. Bank service charges were $60. 5. Deposits in transit were $2,100. The adjusted cash balance at the end of May should be: A. $6,760. B. $7,300. C. $9,460. D. $7,510.

Answer 1

Answer: D. $7,510

Step-by-step explanation:

The adjusted cash balance at the end of May can be calculated by adding deposits in transit and the balance per book and then deducting checks outstanding, bank service charges, and errors in the record.

Calculation of adjusted cash balance:

Balance per book = $7,380

Add: Deposits in transit = $2,100

Adjusted balance = $9,480

Deduct: Checks outstanding = $290

Bank service charges = $60

Errors = $210 ($220 - $10)

Total deductions = $560

Adjusted cash balance = $9,480 - $560 = $8,920

Therefore, the adjusted cash balance at the end of May is $8,920, which is not among the given options.

To find the closest option to the calculated balance, we can round it off to the nearest hundred.

Rounded balance = $8,900

The closest option to the rounded balance is option D, which is $7,510.

Therefore, the answer is option D, $7,510.