Question

At July 31, Crane Company has this bank information: cash balance per bank $8,360, outstanding checks $800, deposits in transit $1,325 and a bank service charge $20.

Determine the adjusted cash balance per bank at July 31.

The adjusted cash balance per bank at July 31

$

Answer 1

Adjusted cash balance per bank at July 31

Cash balance per bank Add: deposit in transit	$8360 $1325
Total Less: outstanding checks	$9685 $800
Adjusted cash balance per bank	$8885

Therefore adjusted cash balance per bank = $8885

NOTES:

1.Deposits in transit:

Deposits in transit are to be added to the cash balance per bank because these are the receipts which are recorded in the cash book of the company as soon as it is received but it is not transferred to the bank account immediately but at a later date. therefore to arrive at ADJUSTED cash balance par bank these deposits in transit are to be ADDED to the cash balance per bank.

2. Outstanding checks:

Outstanding checks are the checks issued by the company which are not cleared yet. Therefore the cash balance per Bank is greater by the amount of outstanding checks. Therefore to arrive at ADJUSTED cash balance per Bank it is to be DEDUCTED from cash balance per bank.

3. Bank service charge.

Bank service charge is already deducted from the bank balance therefore it is not needed to be adjusted again. It is neither added nor deducted.