Question

On May 31, Money Corporation's Cash account showed a balance of $17,000 before the bank reconciliation was prepared. After examining the May bank statement and items included with it, the company's accountant found the following items: Checks outstanding $ 2,850 Deposits outstanding 3,200 NSF check 120 Service fees 110 Error: Money Corp. wrote a check for $50 but recorded it incorrectly for $500. What is the amount of cash that should be reported in the company's balance sheet as of May 31

Answer 1

$17,460

Step-by-step explanation:

The computation of adjusted cash balance is seen below;

Cash account balance

$17,000

NSF check

$120

Service fees

($110)

Amended mistake

$450

Adjusted cash balance

$17,460

The amount of cash that should be reported in the company's balance sheet as of May 31 is $17,460.

Here, the outstanding check and deposit in transit are adjustment for the bank balance and not the firm's cash accounting.

Also, we need to look for the data such as non sufficient funds, service fees etc which were not known until the bank statement was received.