Question

Owen Company's unadjusted book balance at June 30 is $14,440. The company's bank statement reveals bank service charges of $120. Two credit memos are included in the bank statement: one for $1,490, which represents a collection that the bank made for Owen, and one for $200, which represents the amount of interest that Owen had earned on its interest-bearing account in June. Based on this information, Owen's true cash balance is:

Multiple Choice


a.$14,440.


b.$16,010.


c.$15,730.


d.$16,250.

Answer 1

The correct choice is B) $16,010

Step-by-step explanation:

To get the adjusted book balance, one must subtract the bank service charges of $120 and add

• $1,490 which is a debt received by the bank on behalf of Owen Company and
• $200 which is interest earned by the company on it's interest-bearing account.

So,

$14,440- $120 = $14,320

$14,320 + $1,490 + $200 = $16 010

Cheers!