MC Qu. 137 Clayborn Company deposits... Clayborn Company deposits all cash receipts on the day they are received and makes all cash payments by check. At the close of business on May 31, its Cash account shows a debit balance of $24,525. Clayborn's May bank statement shows $21,800 on deposit in the bank. Determine the adjusted cash balance using the following information: Deposit in transit $ 7,450 Outstanding checks $ 6,100 Bank service fees, not yet recorded by company $ 100 A NSF check from a customer, not yet recorded by the company $ 1,275 The adjusted cash balance should be:

The adjusted cash balance is $23,150.

Explanation:

The correct cash balance can only be verified through preparation of a bank reconciliation statement.

The first step is to update the Cash Book Bank balance as follows ;

Debits :

Balance as at May 31                           $24,525

Totals                                                    $24,525

Credits:

Bank service fees                                      $100

Dishonored Check                                  $1,275

Balance as per updated cash book    $23,150

Totals                                                    $24,525

The next step is to prepare a Bank Reconciliation Statement.

Bank Reconciliation Statement as at May 31.

Balance at bank as per the cash book (updated)   $23,150

Add Unpresented cheques                                       $ 6,100

Less Lodgements not yet credited                         ($ 7,450)

Balance as per bank statement                               $21,800

Conclusion :

The adjusted cash balance is $23,150.

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