Question

The April 30 bank statement for Trimble Corporation shows an ending balance of $40,262. The unadjusted cash account balance was $33,750. The accountant for Trimble gathered the following information: There was a deposit in transit for $5,356. The bank statement reports a service charge of $174. A credit memo included in the bank statement shows interest earned of $815. Outstanding checks totaled $13,797. The bank statement included a $2,570 NSF check deposited in April. What is the true cash balance as of April 30?

Answer 1

$36,961

Step-by-step explanation:

The bank reconciliation is one done between the balance per the books and balance per the bank statement. This is usually as a result of transactions known as reconciling items. These are items that have either been recognized in books but yet to be recorded by the bank or vice versa, transactions recorded wrongly by one of the parties etc.

To know the true cash balance, we must first determine what transactions must be adjusted in the books; these are

• service charge of $174 - this will be deducted from the book balance
• credit memo included in the bank statement shows interest earned of $815 - this will be added to the book balance
• a $2,570 NSF check deposited in April - This will be added back to the book balance

Hence, the true cash balance as of April 30

= $33,750 - $174 + $815 + $2570

= $36,961