Brangelina Adoption Agency\'s general ledger shows a cash balance of $4,305. The
ID: 2508010 • Letter: B
Question
Brangelina Adoption Agency's general ledger shows a cash balance of $4,305. The balance of cash in the March-end bank statement is $7,000. The bank statement reveals the following information: checks outstanding of $2,750, bank service fees of $95, and interest earned of $40.
Brangelina Adoption Agency's general ledger shows a cash balance of $4,305. The balance of cash in the March-end bank statement is $7,000. The bank statement reveals the following information: checks outstanding of $2,750, bank service fees of $95, and interest earned of $40.
Explanation / Answer
Calculate the correct balance of cash:
The ledger shows a balance of $4,305.
The bank statement shows the following information:
Checks outstanding - $2,750
Bank service fees - $95
Interest earned - $40
Deduct the bank service fees from the ledger balance and add the interest revenue earned.
Correct cash balance = $4,305 - $95 + $40
= $4,250
Therefore, the correct cash balance obtains by deducting the checks outstanding from the March-end bank statement.
Correct cash balance = $7000 - $2,750
= $4,250