Question

Franklin Company deposits all cash receipts on the day they are received and makes all cash payments by check. At the close of business on August 31, its Cash account shows a debit balance of $22,162. Franklin's August bank statement shows $21,437 on deposit in the bank. Determine the adjusted cash balance using the following information: Deposit in transit $ 7,200 Outstanding checks $ 5,700 Bank service fees, not yet recorded by company $ 140 The bank collected on a note receivable, not yet recorded by the company $ 915

Answer 1

cash account $22,162

bank statement $21,437

adjusted bank statement:

• balance $21,437
• + deposits in transit $7,200
• - outstanding checks $5,700
• total $22,937

adjusted cash account:

• balance $22,162
• - bank service fees $140
• + note collected by bank $915
• total $22,937

the adjusted balances should be equal since it doesn't matter where you start, the result must be the same for both the bank balance and the cash account balance.