The following information pertains to the bank reconciliation as of January, 31 for the Greis Company:
In addition, the reconciliation revealed one error: Check #2146 for $152, written to pay utilities expense, was incorrectly recorded in the books for $125.Required:Using the above information, determine the unadjusted book balance for cash.
What will be an ideal response?
$16,787
True cash balance = Unadjusted bank balance of $18,900 + Deposit in transit of $4,000 ? Outstanding checks of $6,000 = $16,900
True cash balance of $16,900 = Unadjusted book balance (the unknown)
+ Collection of the accounts receivable of $2,000 ? Service charge of $60 ? NSF check of $1,800 ? Error recording Check #2146 of $27
Unadjusted book balance = $16,900 ? $2,000 + $60 + $1,800 + $27 = $16,787
The error in recording Check #2146 caused cash to be overstated by $27, which is the difference between the actual amount of check of $152 and the amount recorded of $125. To correct this error, the company must decrease the book balance.
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