TOPIC 6 ACCOUNTING FOR CASH

A bank statement

• allows a depositor know the financial position of the bank as of a certain date.

• is a credit reference letter written by the depositor's bank.

• is a bill from the bank for services rendered.

• shows the activity which increased or decreased the depositor's account balance.

A check returned by the bank marked "NSF" means

• not satisfactorily filled-out.

• not sufficient funds.

• no signature found.

• no service fee.

In preparing its bank reconciliation for the month of April 2020, Leno, Inc. has available the following information.

Balance per bank statement, 4/30/20 $76,800

NSF check returned with 4/30/20 bank statement 940

Deposits in transit, 4/30/20 9,000

Outstanding checks, 4/30/20 9,300

Bank service charges for April 60

What should be the adjusted cash balance at April 30, 2020?

• $75,100.

• $75,800.

• $75,920.

• $76,500.

The cash account shows a balance of $85,000 before reconciliation. The bank statement does not include a deposit of $5,000 made on the last day of the month. The bank statement shows a collection by the bank of $2,400 and a customer’s check for $680 was returned because it was NSF. A customer’s check for $900 was recorded on the books as $1,080, and a check written for $138 was recorded as $183. The correct balance in the cash account was

• $86,540.

• $86,585.

• $87,400.

• $95,350.

The cash account shows a balance of $42,000 before reconciliation. The bank statement does not include a deposit of $9,200 made on the last day of the month. The bank statement shows a collection by the bank of $4,960 and a customer’s check for $1,100 was returned because it was NSF. A customer’s check for $1,380 was recorded on the books as $1,830, and a check written for $318 was recorded as $381. The correct balance in the cash account was

• $45,347.

• $45,473.

• $46,573.

• $54,673

If the month-end bank statement shows a balance of $75,000, outstanding checks are $54,000, a deposit of $15,000 was in transit at month end, and a check for $4,000 was erroneously charged by the bank against the account, the correct balance in the bank account at month end is

• $37,000.

  .

• $40,000.

• $75,000.

• $118,000.

In preparing its bank reconciliation for the month of April 2020, Sells, Inc. has available the following information.

Balance per bank statement, 4/30/20 $40,290

NSF check returned with 4/30/20 bank statement 1,450

Deposits in transit, 4/30/20 10,200

Outstanding checks, 4/30/20 15,060

Bank service charges for April 60

What should be the adjusted cash balance at April 30, 2020?

• $33,920.

• $33,980.

• $35,370.

• $35,430.

In preparing its August 31, 2020 bank reconciliation, Oakley Corp. has available the following information:

Balance per bank statement, 8/31/20 $65,490

Deposit in transit, 8/31/20 10,170

Return of customer’s check not sufficient funds, 8/30/20 1,800

Outstanding checks, 8/31/20 5,820

Bank service charges for August 350

At August 31, 2020, Oakley’s adjusted cash balance is

• $59,670.

• $59,320.

• $69,840.

• $61,140.

On a bank reconciliation, deposits in transit are

• added to the bank balance.

• deducted from the bank balance.

• added to the book balance.

• deducted from the book balance.

A bank reconciliation should be prepared

• whenever the bank refuses to lend the company money.

• when an employee is suspected of fraud.

• To explain any difference between the depositor's balance per books and the balance per bank.

• by the person who is authorized to sign checks.