Question

Rachel Sells is unable to reconcile the bank balance at January 31. Rachel’s reconciliation is shown here.

Cash balance per bank $3,767.20
Add: NSF check 590.00
Less: Bank service charge 45.00
Adjusted balance per bank $4,312.20
Cash balance per books $4,065.20
Less: Deposits in transit 573.00
Add: Outstanding checks 910.00
Adjusted balance per books $4,402.20

Required:
a. What is the proper adjusted cash balance per bank?
b. What is the proper adjusted cash balance per books?
c. Prepare the adjusting journal entries necessary to determine the adjusted cash balance per books.

Answer 1

Answer and Explanation:

a. The proper adjusted cash balance per bank is

Cash balance per bank $3,767.20

Add: Deposits in transit 573.00

Less: Outstanding checks 910.00

Adjusted cash balance per bank $3,430.20

b. The proper adjusted cash balance per books is

Cash balance per books $4,065.20

Less: NSF check 590.00

Less: Bank service charge 45.00

Adjusted cash balance per book $3,430.20

c. The journal entries are

Account receivable Dr $590

   To cash $590

(being cash paid)

Bank service charges $45

   To cash $45

(being cash paid)