Answer:
The correct ending balance of cash on May 31 is $7,190
Explanation:
The bank reconciliation can be prepared as follows:
Peterson Company
Bank Reconciliation
At May 31
<u>Particulars $ </u>
Bank statement balance at May 31 yet to be reconciled 7,800
Add:
Cash deposited on May 31 yet to be credited 1,290
Less:
Outstanding check <u> (1,900) </u>
Adjusted bank statement balance at May 31 <u> 7,190 </u>
Peterson Company
Bank Reconciliation
At May 31
<u>Particulars $ </u>
Cash book balance yet to be reconciled 7,420
Less:
NSF check (170)
Service fee <u> (60) </u>
Adjusted cash balance at May 31 <u> 7,190 </u>
Since in each of the Adjusted bank statement balance at May 31 and the Adjusted cash balance at May 31 is equal to $7,190, it implies that the correct ending balance of cash on May 31 is $7,190.