Question

Joe reconciles his checking account check register to the penny every month with the bank’s statement. After accurately recording all of the transactions that he initiated during the month, his check registered showed a balance in his checking account of $1,900 as of the end of the month. When he received his bank statement for the month, he noted for the first time the following as of the end of the month: outstanding checks - $300; service charge for safe deposit box - $25; interest earned on the account - $1; unrecorded (by Joe) automatic electronic funds transfers for his monthly car insurance - $75; Joe’s check #1162, which he correctly wrote for $20, actually cleared his bank account for $200 (he called the bank immediately!) and the bank’s statement balance of $1,921. What should Joe’s check register show as the correct account balance in his checking account as of the end of the month?

Answer 1

Answer:

Adjusted balance: 1,801 dollars

Explanation:

Bank statement balance:   1,921

outstanding checks            (300)

bank mistake                       180  

adjusted bank balance      1,801

Cash account balance:      1,900

service charge                       (25)

Interest earned                          1

car insurance expense         (75)

Adjusted Balance:               1,801

We adjust each party for mistake and unknow information.

The bank made a mistake and is unaware of the outstanding checks

Joe didn't know about the insurance amount, the service charge nor the interest thus, it need to record and adjust for this value.