Question

Dance Town Academy

The items listed below were identified while preparing a bank reconciliation for the company’s checking account as of March 31, 2013.

Cash balance according to the general ledger	?
Bank statement balance	$18,500
Outstanding checks	2,700
Customer's bounced check	350
Bank service charges	100
Deposits in transit	1,000
Interest earned on the checking account	60

Refer to Dance Town Academy. Determine the amount of the company’s adjusted cash balance.

		$16,800
		$20,200
		$ 1,700
		Cannot be determined

Answer 1

Amount of the company’s adjusted cash balance = $16800.

Statement showing adjusted cash balance-

Balance as per books		$17190
Add:
Interest earned on the checking account	$60	$60
Less:
Bank services charges	$100
Customer's bounced check	$350	($450)
Adjusted cash balance		$16800

OR

Balance as per bank statement		$18500
Add:
Deposits in transit	$1000	$1000
Less:
Outstanding checks	$2700	($2700)
Adjusted cash balance		$16800

Solution:

Statement showing cash balance in general ledger-

Balance as per bank statement		$18500
Add:
Customer's bounced check	$350
Bank services charges	$100
Deposits in transit	$1000	$1450
Less:
Outstanding checks	$2700
Interest earned on the checking account	$60	($2760)
Balance as per books		$17190