Question

In Company CC's general ledger, the ending balance in the cash T-account is: $650 The company's accountant found the following reconciling items: Company Error = $50 (the company accidentally recorded this expense twice) Deposits Outstanding = $350 Service Fee = $25 Checks Outstanding = $200 Note collected by the bank = $500 Interest earned on note = $10 NSF Check = $250 Interest earned on bank account = $30 What is the correct ending balance for cash after reconciliation?

Answer 1

cash balance before adjustments = $650

add:

company error = $50

note collected by bank = $500

interest earned on note = $10

interest earned on bank a/c = $30

Less:

NSF Check = $250

Service fee = $ 25

cash balance after reconciliation = $ 965

NOTE:

1. DEPOSIT OUTSTANDING is a companys receipt which has been recorded by the company but not yet cleared from the bank i.e like deposit in transit. so since its already been adjusted to the cash book no further reconciliation is need.

2. CHECKS OUTSTANDING is adjusted to the bank balance and no further adjustment is needed to the cash balance as it already been adjusted.