Question

Stevens Construction Company, Inc. has two bank accounts at different banks and occasionally transfers money between the two accounts. Which of the following combinations shown in the following bank transfer schedule would overstate the balance of cash at June 30, the end of its fiscal year?

A.

Disbursements - Recorded on books : 6/30

Disbursements - Recorded by First National Bank : 7/2

Deposits- Recorded on books : 6/30

Deposits - Recorded by Fifth National Bank : 6/30

B.

Disbursements - Recorded on books : 6/30

Disbursements - Recorded by First National Bank : 6/30

Deposits- Recorded on books : 6/30

Deposits - Recorded by Fifth National Bank : 7/3

C.

Disbursements - Recorded on books : 7/3

Disbursements - Recorded by First National Bank : 7/4

Deposits- Recorded on books : 6/30

Deposits - Recorded by Fifth National Bank : 7/2

D.

Disbursements - Recorded on books : 7/3

Disbursements - Recorded by First National Bank : 7/4

Deposits- Recorded on books : 7/2

Deposits - Recorded by Fifth National Bank : 7/3

Answer 1

Combination B and C would overstate the balance of cash at June 30, the end of its fiscal year.

Combination A would understate the balance of cash at June 30 as Disbursements are recorded later by First National Bank.

Combination B would overstate the balance of cash at June 30 as Deposits are recorded later by Fifth National Bank.

Combination C would overstate the balance of cash at June 30 as Deposits are recorded later by Fifth National Bank.

Combination D would have no effect on the balance of cash at June 30 as transactions are related to July.