The treasurer for Kent Enterprises was preparing a bank reconciliation as of October 31, 2010, when the following items were identified:
Cash balance per Kent's company records $32,800
Deposits in transit $4,300
Outstanding checks $2,200
Interest earned on the checking account $100
NSF check from Kent's customer $400
Kent's adjusted cash balance at October 31, 2010, is
1. $32,800
2. $32,500
3. $34,600
4. $34,900
3. $34,600
To calculate the adjusted cash balance at October 31, 2010, we need to consider the items identified in the bank reconciliation:
1. Start with the cash balance per Kent's company records: $32,800
2. Add deposits in transit: $4,300
3. Subtract outstanding checks: $2,200
4. Add interest earned on the checking account: $100
5. Subtract the NSF check from Kent's customer: $400
Now let's do the calculations step-by-step:
Step 1: Start with the cash balance per Kent's company records
Cash balance = $32,800
Step 2: Add deposits in transit
Cash balance + Deposits in transit = $32,800 + $4,300 = $37,100
Step 3: Subtract outstanding checks
Cash balance - Outstanding checks = $37,100 - $2,200 = $34,900
Step 4: Add interest earned on the checking account
Cash balance + Interest earned = $34,900 + $100 = $35,000
Step 5: Subtract the NSF check from Kent's customer
Cash balance - NSF check = $35,000 - $400 = $34,600
Therefore, the adjusted cash balance at October 31, 2010, is $34,600.
The correct answer is option 3. $34,600.
To find the adjusted cash balance at October 31, 2010, we need to adjust the cash balance according to the items identified in the bank reconciliation.
1. Start with the cash balance per Kent's company records: $32,800
2. Add deposits in transit: $4,300
- Deposits in transit are deposits made by Kent Enterprises that have not yet been recorded by the bank. These deposits should be added to the cash balance since they have not been included in the bank's records yet.
- New cash balance: $32,800 + $4,300 = $37,100
3. Deduct outstanding checks: $2,200
- Outstanding checks are checks issued by Kent Enterprises that have not yet been cashed by the recipients and deducted from the bank's records. These checks should be deducted from the cash balance since they have not been accounted for in the bank's records.
- New cash balance: $37,100 - $2,200 = $34,900
4. Add interest earned on the checking account: $100
- Interest earned on the checking account is an additional amount credited to Kent Enterprises' account by the bank. This amount should be added to the cash balance since it has not been accounted for in Kent's company records.
- New cash balance: $34,900 + $100 = $35,000
5. Deduct NSF check from Kent's customer: $400
- An NSF check is a check that has been returned by the bank due to insufficient funds in the customer's account. This amount should be deducted from the cash balance since it was previously included in Kent's company records but is no longer valid.
- New cash balance: $35,000 - $400 = $34,600
Therefore, Kent's adjusted cash balance at October 31, 2010, is $34,600.
The correct answer is 3. $34,600.