The cash account shows a balance of $85,000 before reconciliation. The bank statement does not

The cash account shows a balance of $85,000 before reconciliation. The bank statement does not include a deposit of $5,000 made on the last day of the month. The bank statement shows a collection by the bank of $2,400 and a customer’s check for $680 was returned because it was NSF. A customer’s check for $900 was recorded on the books as $1,080, and a check written for $138 was recorded as $183. The correct balance in the cash account was

Select one:

a. $86,540.

b. $87,400.

c. $86,785

d. $95,350

e. The answer does not exist

Solutions

Expert Solution

Bank reconciliation is one of the internal controls on the company's cash. This helps the company determine the correct cash balance that should be reported on the balance sheet.

Correct answer is option e = The answer does not exist

Explanation :

Unadjusted cash balance
Add: Collection by bank
Add: Error in recording check ($183-138)
S
S
S
$
S
S
S
85.000
2.400
45
87.445

Correct cash balance is $86,585 which is not given in the options. therefore correct answer is option e

Ramesh R answered 2 years ago

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