Question

A company received a bank statement showing a balance of $78,000. Reconciling items included outstanding checks of $2,400 and a deposit in transit of $9,400. What is the company's adjusted bank balance

Answer 1

Answer:

Adjusted Bank Balance = $85,000

Explanation:

Adjustment of bank balance is a bank reconciliation procedure, that is used to match the amount in the bank statement with the amount in the company's balance sheet.

To adjust the bank balance, particulars that need to be subtracted or added to the bank statement balance has to be identified and treated accordingly.

For this example, the adjusted balance is calculated thus:

Adjusted bank balance = (Bank statement balance) - (outstanding checks) +(deposit in transit)

Adjusted Bank Balance = 78,000 - 2,400 + 9,400 = $85,000

Note:

outstanding checks are subtracted because they are payments to be made made by the company, representing a liability to the company (payer)

deposit in transit is an income to the company that has not been credited yet, but that will be credited.