Question

The balance in a company's Cash account on August 31 was $18,800 before the bank reconciliation was prepared. After examining the August bank statement and items included with it, the company's accountant found: Checks outstanding $ 3,300 NSF check 110 Note collected by bank for the Colt Company 1,650 Deposits outstanding 2,800 Bank service fees 220 What is the amount of cash that should be reported in the balance sheet as of August 31

Answer 1

$20,340

Step-by-step explanation:

The amount of cash to be recognize is the adjusted amount after considering the transactions that were omitted from the bank statement and cash book and properly recognizing the erroneous entries into the two books.

Considering the reconciling items,

Checks outstanding $ 3,300 - This has been recognized in the company's Cash account and as such need no adjustment in the company's books

NSF check 110 - This has been deducted from the company's cash book but was not honored by the bank as such, it will be added back to the company's cash book balance

Note collected by bank for the Colt Company 1,650 - This has been recognized by the bank and as such will be added to the company's cash book balance

Deposits outstanding 2,800 - This has been recognized in the company's Cash account and as such need no adjustment in the company's books.

Bank service fees 220 - This has been recognized by the bank and as such will be deducted as a charge to the company's cash book balance

Hence the amount of cash that should be reported in the balance sheet as of August 31 will be

= $18,800 + $110 + $1650 - $220

= $20,340