Question

Use the following information to answer questions 6–8. You are doing a bank
reconciliation for May, 20X1. You have a $2,785 unadjusted ledger cash balance
and the following data:
Outstanding checks: No. 719, $200; No. 727, $800; No. 732, $625
Deposits in transit, $1,200
Check No. 742 (for repairs) written for $505 but incorrectly
recorded as $550
NSF check from a customer, $500
Bank service charge for May, $5
Balance per bank statement, $2,750

8. Which adjustment will you need to make to company books?
a. a net decrease in Cash of $550
b. a net decrease in Cash of $505
c. a net decrease in Cash of $460
d. a net increase in Cash of $4510. A trial balance has total debits of $197,900 and total credits of $199,700.
Which account may contain a transposition error?
a. A Cash account with a balance of $900
b. An Accounts Receivable with a balance of $1,800
c. A Cost of Goods Sold account with a balance of $4,200
d. An Accounts Payable with a balance of $5,300

Answer 1

1)
Bank Reconcilation
Balance as per bank statement	$ 2,750
Add: Deposits in Transit	$ 1,200
Less: Outstanding Cheques             ( $ 200 + $ 800 + $ 625 )	($ 1,625)
Adjusted Balance	$ 2,325
Balance as per Cash Book	$ 2,785
Add: Error in Recording Cheque                 ( $ 550 (-) $ 505)	$ 45
Less: NSF Cheque	($ 500)
Less: Bank Service Charge	($ 5)
Adjusted Balance	$ 2,325
Adjustment need to make to company books              =   $ 2,785 (-) $ 2,325              =    $ 460
Adjustment need to make to company books	a net decrease in Cash of $460
Option (c ) is Correct
2)
Transposition is nothing but a change in digits places for a number that will result the Change the balance
Difference in Trail Balance                  = $ 197,900 (-) $ 199,700                  =   $ 1,800 (more in Credit balance )
From the given options, Account payable impacts the Credit balance in Trail balance
Transposition of number        = $ 5,300 (-) $ 3,500        =   $ 1,800   = Difference in Trail Balance
So option (s) is Correct
An Accounts Payable with a balance of $5,300