ExpertMedium1 markMultiple Choice
CPA · Question 18 · Area II: Balance Sheet Accounts
In preparing its bank reconciliation for the month of April, Zelma Corp. has the following information:<br/>- Balance per bank statement, 4/30: $30,000<br/>- NSF check returned by bank: $500<br/>- Deposits in transit, 4/30: $2,000<br/>- Outstanding checks, 4/30: $4,000<br/>- Bank service charges: $50<br/><br/>What should be the adjusted cash balance per books at April 30?
In preparing its bank reconciliation for the month of April, Zelma Corp. has the following information:<br/>- Balance per bank statement, 4/30: $30,000<br/>- NSF check returned by bank: $500<br/>- Deposits in transit, 4/30: $2,000<br/>- Outstanding checks, 4/30: $4,000<br/>- Bank service charges: $50<br/><br/>What should be the adjusted cash balance per books at April 30?
Answer options:
A.
$28,550
B.
$32,000
C.
$28,000
D.
$27,450
How to approach this question
You can calculate the adjusted balance starting from the Bank side (easier here) or the Book side. Adjusted Bank = Bank + DIT - Outstanding. Adjusted Book = Book - NSF - Service Charges. Since we don't have the unadjusted book balance, use the Bank side.
Full Answer
C.$28,000✓ Correct
C
Adjusted Cash Balance = Balance per Bank + Deposits in Transit - Outstanding Checks.<br/>$30,000 + $2,000 - $4,000 = $28,000.<br/>The NSF check and service charges are adjustments to the *Book* balance to arrive at this same $28,000, but they are not needed for the calculation given the data available.
Common mistakes
Trying to adjust the bank balance for NSF checks (NSF checks are already reflected in the bank balance; they need to be recorded in the books).
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