Question

Clayborn Company deposits all cash receipts on the day they are received and makes all cash payments by check. At the close of business on May 31, its Cash account shows a debit balance of $27,525. Clayborn's May bank statement shows $24,200 on deposit in the bank. Determine the adjusted cash balance using the following information:
Deposit in transit $8,350
Outstanding checks $6,700
Bank service fees, not yet recorded by company $130
A NSF check from a customer, not yet recorded by the company $1,545


The adjusted cash balance should be:__________

Answer 1

Answer:

Adjusted cash balance : $25850

Explanation:

The goal of a reconciliation statement is to ascertain the differences between the banks records and the depositor’s records and make accounting changes as deemed appropriate. There is a general flow that is used to make the correcting entries:

1. The process flow starts with the bank’s ending cash balance

2. Add any deposits made by the company to the bank that are in transit

3. Deduct any cheques that are uncleared by the bank

4. Add or deduct any other differences available as necessary

5. In the company bank records, once again start with the ending balance

6. Add interests earned

7. Deduct any bank service fees, penalties and NSF (Non-Sufficient Funds) cheques.

8. Add or deduct any other differences available as necessary

At the end of this process, it is likely that both accounts would be equal and tally.

Please refer attached table for details on the calculation.