Question

Alton Co. had a cash balance of $32,300 recorded in its general ledger at the end of the month, prior to receiving its bank statement. Reconciliation of the bank statement reveals the following information:
Bank service charge – $15
Check deposited and returned for insufficient funds check – $120
Deposit recorded in the general ledger as $258 but should be $285
Checks outstanding – $1,800

After reconciling its bank statement, what amount should Alton report as its cash account balance?

Answer 1

Answer:

$32,432

Explanation:

Cash balance per cash book                                 $32,300

Bank service charge                                                        (15)

Returned check                                                               120

Correction of Deposit                                                      27

Adjusted cash balance per general ledger            32,432

The bank charge will be recognized as a credit in the cash account. The returned check had been credited before and will be debited back to reverse the earlier treatment.

Additional deposit of $27 will be recognized in the books being the difference between $258 that had been recognized and $285 the actual amount.

The outstanding checks of $1,800 will not be adjusted for as the transactions are valid.