Knowee
Questions
Features
Study Tools

The following information pertains to Poorten Company.1. Cash balance per bank statement on May 31st is $14,280.2. A debit memorandum on the May bank statement shows an NSF check for $175 from Copple Co., a customer. 3. Cash balance per books at May 31st is $13,307.4. Deposits in transit at May 31st total $1,752.5. Bank collected $505 note for Poorten in May, plus interest of $25, less a fee of $15. The collection has not been recorded by Poorten, and no interest has been accrued.6. Outstanding checks at May 31st total $2,410.7. Review of May bank statement shows a bank service charge not recorded by Poorten for $25.After completing the bank reconciliation, what is the adjusted cash balance Poorten Company will report report on its Balance Sheet at May 31, 2020?Group of answer choices$13,612$16,032$13,824$13,622

Question

The following information pertains to Poorten Company.1. Cash balance per bank statement on May 31st is 14,280.2.AdebitmemorandumontheMaybankstatementshowsanNSFcheckfor14,280.2. A debit memorandum on the May bank statement shows an NSF check for 175 from Copple Co., a customer. 3. Cash balance per books at May 31st is 13,307.4.DepositsintransitatMay31sttotal13,307.4. Deposits in transit at May 31st total 1,752.5. Bank collected 505noteforPoorteninMay,plusinterestof505 note for Poorten in May, plus interest of 25, less a fee of 15.ThecollectionhasnotbeenrecordedbyPoorten,andnointeresthasbeenaccrued.6.OutstandingchecksatMay31sttotal15. The collection has not been recorded by Poorten, and no interest has been accrued.6. Outstanding checks at May 31st total 2,410.7. Review of May bank statement shows a bank service charge not recorded by Poorten for 25.Aftercompletingthebankreconciliation,whatistheadjustedcashbalancePoortenCompanywillreportreportonitsBalanceSheetatMay31,2020?Groupofanswerchoices25.After completing the bank reconciliation, what is the adjusted cash balance Poorten Company will report report on its Balance Sheet at May 31, 2020?Group of answer choices13,61216,03216,03213,824$13,622

...expand
🧐 Not the exact question you are looking for?Go ask a question

Solution

To calculate the adjusted cash balance, we need to adjust both the bank and book balances to their correct amounts.

Starting with the bank balance:

  1. Cash balance per bank statement on May 31st is $14,280.
  2. Add deposits in transit. These are amounts that the company has recorded as received but the bank has not yet processed. So, we add these to the bank balance: 14,280+14,280 + 1,752 = $16,032.
  3. Subtract outstanding checks. These are amounts that the company has written checks for and deducted from its book balance, but the checks have not yet cleared the bank. So, we subtract these from the bank balance: 16,032−16,032 - 2,410 = $13,622.

Now, adjust the book balance:

  1. Cash balance per books at May 31st is $13,307.
  2. Add the amount the bank collected on the note, including interest, and subtract the fee. The bank has added this amount to the company's account, but the company has not yet recorded it: 13,307+13,307 + 505 + 25−25 - 15 = $13,822.
  3. Subtract the NSF check. This is a check that was deposited and recorded by the company, but it bounced, so the bank deducted it from the account: 13,822−13,822 - 175 = $13,647.
  4. Subtract the bank service charge. This is a fee that the bank deducted from the account, but the company has not yet recorded: 13,647−13,647 - 25 = $13,622.

So, the adjusted cash balance that Poorten Company will report on its Balance Sheet at May 31, 2020 is $13,622.

This problem has been solved

Similar Questions

A company has a $10,000 cash balance per its books. The bank statement has a balance of $9,580. The bank reconciliation included $800 of deposits-in transits, $500 of checks outstanding, a $100 NSF check from a customer, and a $20 bank service charge. Given the above reconciling items, the up-to-date cash balance equals .

The following data was taken from a firm’s bank reconciliation statement: book balance, $7,910; deposit in transit, $150; NSF check from a customer, $200; outstanding checks, $5,000; bank service charge, $10. Its adjusted book balance is

Based on the May 2020 bank reconciliation completed in the following question, which of the following would not be a part of one of the three adjusting journal entries Poorten will record at May 31, 2020 to adjust the cash account balance? Group of answer choicesCredit to Interest Revenue for $25Debit to Outstanding Checks for $2,410Debit to Service Charge Expense for $25Debit to Accounts Receivable for $175

Based on the following information, how much is the correct cash in bank assuming the cash balance per book is P500,000? NSF check 100,000Note collection 200,000Deposit in transit 30,000Group of answer choices730,000700,000800,000600,000

Littleton Books has the following transactions during May. May 2 Purchases books on account from Readers Wholesale for $3,100, terms 2/10, n/30.May 3 Pays cash for freight costs of $180 on books purchased from Readers.May 5 Returns books with a cost of $300 to Readers because part of the order is incorrect.May 10 Pays the full amount due to Readers.May 30 Sells all books purchased on May 2 (less those returned on May 5) for $3,800 on account.Exercise 6-9 (Algo) Part 1Required:1. Record the transactions of Littleton Books, assuming the company uses a perpetual inventory system.

1/2

Upgrade your grade with Knowee

Get personalized homework help. Review tough concepts in more detail, or go deeper into your topic by exploring other relevant questions.