The April 30 bank statement for Trimble Corporation shows an ending balance of $34,351. The unadjusted cash account balance was $28,250. The accountant for Trimble gathered the following information: There was a deposit in transit for $4,240. The bank statement reports a service charge of $39. A credit memo included in the bank statement shows interest earned of $95. Outstanding checks totaled $10,935. The bank statement included a $650 NSF check deposited in April. What is the true cash balance as of April 30?

Question

Business

Karly Patrick

31 August, 11:20

The April 30 bank statement for Trimble Corporation shows an ending balance of $34,351. The unadjusted cash account balance was $28,250. The accountant for Trimble gathered the following information: There was a deposit in transit for $4,240. The bank statement reports a service charge of $39. A credit memo included in the bank statement shows interest earned of $95. Outstanding checks totaled $10,935. The bank statement included a $650 NSF check deposited in April. What is the true cash balance as of April 30?

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Lilliana Ellis · Answer 1

Cash balance As Per The books / Cash Account Adjustment:

Unadjusted Or Opening Balance: $28,250

Deduct Bank Service Charge: ($39)

Add: Interest Earned : $95

Deduct: NSF Check Deposit: ($650)

Therefore: 28,250-39+95-650 = $27,656

Bank statement Adjustment:

Balance as Per Bank Statement: $34,351

Add: A deposit Transfer not reflected in the Account: $4,240

Deduct Outstanding Checks: ($10,935)

Therefore: 34,351+4,240-10935 = $27,656

The True Cash Balance as of April 30 is $27,656

Basically, the additionally information given after the Bank Statement and the Unadjusted Cash Account Balances represent the untreated transactions in the course of the year that caused the differences between the two. Ideally, the Bank Statement and the Cash Account Balances should be the same.

By carrying out a Reconciliation, the true balance can be obtained.

Adjustments

Deposits in transit: It is a transaction in the Cash Account that is yet to be reflected in the bank account so 4, 240 will be added to the bank total. Service Charge: This is a bank charge that is yet to reflect in the cash balance. Bank Charges are to be deducted because they reduce balances. so $ 39 is deducted from the cash balance Interest Earned: Earned on the Bank Balance, it increases the bank balance but it is yet to reflect in the cash account. SO add $ 95 to the cash balance. Outstanding Checks: These have been issued by the business but yet to be cashed by the receivers. It should be deducted from the bank Statement. Therefore, $10,935 should be deducted from the bank balance An NSF (Not Sufficient Fund) Check is is not honored by the bank of the entity issuing the check due to insufficient fund in the checking account. Since it was not honored by the bank, it has to be deducted from the cash account balance as well. Therefore, deduct $650 from the cash account balance