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FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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![### Bank Reconciliation Explanation
XYZ Inc is preparing the October month-end Bank Reconciliation. The balance in the cash ledger on October 31 was $1,900. Some adjustments to this cash ledger balance were recorded on the Bank Reconciliation Report, as follows:
- **Bank service charge**: $55
- **NSF cheque**: $375
- **Cheque #40 correction**: This cheque was correctly written and processed for $3,030; however, the XYZ bookkeeper recorded the cheque amount as $3,300.
**Task:**
What is the adjusted cash balance for October 31, for the Bank Reconciliation Report? Show your basic math.
#### Solution:
1. **Initial Cash Ledger Balance**: $1,900
2. **Adjust for Bank Service Charge**:
- Subtract $55 (service charge)
- New balance: $1,900 - $55 = $1,845
3. **Adjust for NSF Cheque**:
- Subtract $375 (NSF cheque)
- New balance: $1,845 - $375 = $1,470
4. **Adjust for Cheque #40 Error**:
- Difference: $3,300 (recorded) - $3,030 (actual) = $270
- Add $270 (since $270 was recorded as an extra deduction)
- New balance: $1,470 + $270 = $1,740
**Adjusted Cash Balance**: $1,740](https://content.bartleby.com/qna-images/question/7bf97e0d-d7a5-439f-8e2d-62e4cff5eb95/7935de74-40db-4ad5-b078-238c199628e4/n0apq5_thumbnail.png)
Transcribed Image Text:### Bank Reconciliation Explanation
XYZ Inc is preparing the October month-end Bank Reconciliation. The balance in the cash ledger on October 31 was $1,900. Some adjustments to this cash ledger balance were recorded on the Bank Reconciliation Report, as follows:
- **Bank service charge**: $55
- **NSF cheque**: $375
- **Cheque #40 correction**: This cheque was correctly written and processed for $3,030; however, the XYZ bookkeeper recorded the cheque amount as $3,300.
**Task:**
What is the adjusted cash balance for October 31, for the Bank Reconciliation Report? Show your basic math.
#### Solution:
1. **Initial Cash Ledger Balance**: $1,900
2. **Adjust for Bank Service Charge**:
- Subtract $55 (service charge)
- New balance: $1,900 - $55 = $1,845
3. **Adjust for NSF Cheque**:
- Subtract $375 (NSF cheque)
- New balance: $1,845 - $375 = $1,470
4. **Adjust for Cheque #40 Error**:
- Difference: $3,300 (recorded) - $3,030 (actual) = $270
- Add $270 (since $270 was recorded as an extra deduction)
- New balance: $1,470 + $270 = $1,740
**Adjusted Cash Balance**: $1,740
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