Hazelton Manufacturing prepares a bank reconciliation at the end of every month.

Question

Hazelton Manufacturing prepares a bank reconciliation at the end of every month. At the end of May, the general ledger checking account showed a balance of $1,360, and the bank statement showed a bank balance of $1,445. Outstanding checks totaled $350, and deposits in transit were $150. The bank statement listed service charges of $30 and NSF checks totaling $85. The journal entry to correct cash will include: (Points : 4)
A). a debit of $115.
B). a credit of $115.
C). a debit of $230.
D). a credit of $85.

Explanation / Answer

Heya, Ohio buddy, First find what the corrected cash balance is. The adjustments are: Bank balance on bank statement: $1445 Add back deposits in transit: + $150 Subtract outstanding checks: - $350 Correct balance: $1245 So our checking accounting shows a balance of $1360, but the correct balance is $1245. The difference is $115. So this means that we would debit $115 back to cash. A seems correct to me.

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