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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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
Transcribed Image Text:**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:** $86,000
2. **Add Deposit Not Included in Bank Statement:**
- $86,000 + $5,200 = $91,200
3. **Add Bank Collection Not Recorded:**
- $91,200 + $2,400 = $93,600
4. **Subtract NSF Check:**
- $93,600 - $600 = $93,000
5. **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 = $92,860
6. **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.
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