FINANCIAL ACCOUNTING
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
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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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