**Bank Reconciliation Exercise - Calculation of Correct Cash Account Balance**The cash account shows a balance of $86,000 before reconciliation. The bank statement does not include a deposit of $5,200 made on the last day of the month. The bank statement shows a collection by the bank of $2,400 and a customer's check for $600 was returned because it was NSF (Non-Sufficient Funds). A customer's check for $940 was recorded on the books as $1,080, and a check written for $131 was recorded as $193. The correct balance in the cash account was:- $88,400- $87,660- $87,722- $96,726### Steps to Calculate the Correct Balance:1. **Initial Cash Account Balance:** $86,0002. **Add Deposit Not Included in Bank Statement:** - $86,000 + $5,200 = $91,2003. **Add Bank Collection Not Recorded:** - $91,200 + $2,400 = $93,6004. **Subtract NSF Check:** - $93,600 - $600 = $93,0005. **Adjust for Recording Error in Customer's Check:** - Overstated Check for $940 as $1,080: - Difference = $1,080 - $940 = $140 (Subtract this) - $93,000 - $140 = $92,8606. **Adjust for Recording Error in Written Check:** - Overstated Check for $131 as $193: - Difference = $193 - $131 = $62 (Add this) - $92,860 + $62 = $92,922**Correct Balance in the Cash Account: $92,922**However, note that none of the provided options in the question matches this calculated balance. Thus, all the given options are incorrect based on the above calculations.

Bank reconciliation: It is a statement drawn up by the business to verify the cash book balance with…

The cash account shows a balance of $86000 before reconciliation. The bank statement does not include a deposit of $5200 made on the last day of the month. The bank statement shows a collection by the bank of $2400 and a customer's check for $600 was returned because it was NSF. A customer's check for $940 was recorded on the books as $1080, and a check written for $131 was recorded as $193. The correct balance in the cash account was O $88400. O $87660. O $87722. O $96726.

The cash account shows a balance of $86000 before reconciliation. The bank statement does not include a deposit of $5200 made on the last day of the month. The bank statement shows a collection by the bank of $2400 and a customer's check for $600 was returned because it was NSF. A customer's check for $940 was recorded on the books as $1080, and a check written for $131 was recorded as $193. The correct balance in the cash account was O $88400. O $87660. O $87722. O $96726.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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