Question

Duke Company's unadjusted bank balance at March 31 is $2,300. The bank reconciliation revealed outstanding checks amounting to $500 and deposits in transit of $400. Based on this information, Duke's true cash balance is:________.
A. $2,400.
B. $2,000.
C. $2,200.
D. $2,700.

Answer 1

Duke's true cash balance is $2,200

Explanation:

True cash balance is computed as follows:

• True cash balance = Bank balance + Deposits in transit - Outstanding checks

Duke's true cash balance is computed as follows:

• Duke Company's unadjusted bank balance at March 31 = $2,300
• Deposits in transit = $400
• Outstanding checks amounting to $500
• True cash balance = $2,300 + $400 - $500
• True cash balance = $2,200

So, Duke's true cash balance = $2,200