. Leng Xiong is unable to reconcile the bank balance at January 31. Leng’s reconciliation is shown here.
Cash balance per bank $3,660.20
Add: NSF check 370.00
Less: Bank service charge 25.00
Adjusted balance per bank $4,005.20
Cash balance per books $3,975.20
Less: Deposits in transit 590.00
Add: Outstanding checks 670.00
Adjusted balance per books $4,055.20
Instructions:
(a) What is the proper adjusted cash balance per bank?
(b) What is the proper adjusted cash balance per books?
(c) Prepare the adjusting journal entries necessary to determine the adjusted cash balance per books.
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To answer these questions, we need to carefully analyze the given information and perform the necessary calculations. Let's go step by step:
(a) The proper adjusted cash balance per bank can be calculated by adding the NSF check and deducting the bank service charge from the cash balance per bank.
Adjusted cash balance per bank = Cash balance per bank + NSF check - Bank service charge
= $3,660.20 + $370.00 - $25.00
= $4,005.20
Therefore, the proper adjusted cash balance per bank is $4,005.20.
(b) The proper adjusted cash balance per books can be calculated by subtracting the deposits in transit and adding the outstanding checks to the cash balance per books.
Adjusted cash balance per books = Cash balance per books - Deposits in transit + Outstanding checks
= $3,975.20 - $590.00 + $670.00
= $4,055.20
Therefore, the proper adjusted cash balance per books is $4,055.20.
(c) To prepare the adjusting journal entries necessary to determine the adjusted cash balance per books, we need to consider the changes in the cash balance. In this case, we need to adjust for the deposits in transit and outstanding checks.
Adjusting journal entries:
1. Increase the Cash balance per books by the amount of Deposits in transit:
Debit: Deposits in transit
Credit: Cash
2. Decrease the Cash balance per books by the amount of Outstanding checks:
Debit: Cash
Credit: Outstanding checks
Note: You may need additional information to determine the specific accounts to debit and credit. The above entries are based on general assumptions.
In conclusion, the proper adjusted cash balance per bank is $4,005.20, the proper adjusted cash balance per books is $4,055.20, and the adjusting journal entries need to be prepared to determine the adjusted cash balance per books.