Question

In the process of reconciling its bank statement for January, Maxi's Clothing's accountant compiles the following information:

Cash balance per company books on January 30	$	7,025
Deposits in transit at month-end	$	2,260
Outstanding checks at month-end	$	750
Bank service charges	$	48
EFT automatically deducted monthly, not yet recorded by Maxi	$	840
An NSF check returned on a customer account	$	495

The adjusted cash balance per the books on January 31 is:

Answer 1

Calculation of adjusted cash book as on January 31^st

	$
Cash balance as per company books	7,025
Deposit in transit at month-end as it is not in bank passbook, so we have to reduce our cash balance to match with bank passbook	(2,260)
-Bank services charges debited in pass book, which is not recorded in traders book must be recorded to match with passbook	(48)
-EFT automatically debited must be deducted, to bring cash balance equal to that of bank	(840)
An NSF check returned should be reversed in our book to cancel the earlier entry that reduces bank balance	(495)
Adjusted cash balance as per cash book on January 31st	3,382

Note: outstanding checks at month-end denotes cheques deposited but not collected, which is called timing difference. It should not be adjusted while preparing adjusted cash book