Question

At the end of the month, Grant Entertainment Company showed a $9,300 book balance in its cash account. The following information was gathered by studying the bank statement and the company's cash records: (1) deposits in transit amounted to $3,150 (2) outstanding checks were $6,200 (3) a $550 check had been incorrectly drawn on Grant's account by the bank (4) NSF checks returned by the bank were $750 (5) bank service charge was $29 (6) credit memo for $75 for the collection of one of the company's account receivable Based on the above information the true cash balance would be

Answer 1

$9,146

Step-by-step explanation:

The question states that the true cash balance should be calculated based on the information given

In order to do this, a bank reconciliation statement will be computed as follows:

December 31

Particulars Amount ($) Amount ($)

Cash balance (based company books) 9,300

Add the following:

Incorrectly drawn check 550

Company's credit memo on account receivable 75

Subtract the following:

NSF check 750

Bank Charges 29

Adjusted Cash Balance as per books 9,146

The true cash balance after all the necessary additions and subtractions based on omissions from the bank statement is $9,146