Question

At July 31, Farmer Company has this bank information: cash balance per bank $8,344; outstanding checks $804; deposits in transit $1,383; and a bank service charge $58.
Determine the adjusted cash balance per bank at July 31.
The adjusted cash balance per bank at July 31 $At July 31, Farmer Company has this bank informati_________

Answer 1

Answer:

Adjusted balance per cash book : $ 8,865

Explanation:

Computation of Adjusted cash balance

Balance as per bank statement                                  $  8.344

Less: Outstanding checks                                           $(    804)

Add: Deposits in transit                                                $ 1,383

Less: Bank Service charges                                        $(     58)

Adjusted balance per cash book                                $  8,865      

The adjustments have been made to reflect the cash book balance

The outstanding checks when issued would have been recorded in the cash book and thus are deducted from the bank statement balance.

The deposits in transit would also have been recorded in the cash book and since they have not been received at the bank, are not included in the bank statement balance and are thus added to get the cash book balance

The bank service charges is the information provided by the bank on the bank statement and has to be reflected in the  cash balance as a reduction adjustment.