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Neumann, Inc.'s books show an ending cash balance of $20,000 before preparing the bank reconciliation. Given that the bank reconciliation shows outstanding checks of $2,000; deposits outstanding of $3,000; NSF check of $200; and interest earned on the bank account of $30, the company's up-to-date ending cash balance equals:Multiple choice question.$21,000$18,000$20,200$19,830

Question

Neumann, Inc.'s books show an ending cash balance of 20,000beforepreparingthebankreconciliation.Giventhatthebankreconciliationshowsoutstandingchecksof20,000 before preparing the bank reconciliation. Given that the bank reconciliation shows outstanding checks of 2,000; deposits outstanding of 3,000;NSFcheckof3,000; NSF check of 200; and interest earned on the bank account of 30,thecompany′sup−to−dateendingcashbalanceequals:Multiplechoicequestion.30, the company's up-to-date ending cash balance equals:Multiple choice question.21,00018,00018,00020,200$19,830

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Solution

To calculate the up-to-date ending cash balance, we need to adjust the book balance based on the information given in the bank reconciliation. Here's how:

  1. Start with the ending cash balance according to the company's books: $20,000.

  2. Add any deposits in transit (i.e., deposits that the company has recorded but which the bank has not yet processed). In this case, that's 3,000.So,3,000. So, 20,000 + 3,000=3,000 = 23,000.

  3. Subtract any outstanding checks (i.e., checks that the company has written and recorded but which the bank has not yet processed). In this case, that's 2,000.So,2,000. So, 23,000 - 2,000=2,000 = 21,000.

  4. Subtract any NSF (non-sufficient funds) checks. These are checks that were deposited into the company's account but bounced due to insufficient funds in the account of the person who wrote the check. In this case, that's 200.So,200. So, 21,000 - 200=200 = 20,800.

  5. Add any interest earned on the bank account. In this case, that's 30.So,30. So, 20,800 + 30=30 = 20,830.

So, the up-to-date ending cash balance is 20,830.Therefore,thecorrectansweris20,830. Therefore, the correct answer is 20,830.

This problem has been solved

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