Nickleson Company had an unadjusted cash balance of $8,907 as of May 31. The com

Question

Nickleson Company had an unadjusted cash balance of $8,907 as of May 31. The company’s bank statement, also dated May 31, included a $95 NSF check written by one of Nickleson’s customers. There were $975 in outstanding checks and $205 in deposits in transit as of May 31. According to the bank statement, service charges were $30, and the bank collected a $1,450 note receivable for Nickleson. The bank statement also showed $21 of interest revenue earned by Nickleson.

Determine the true cash balance as of May 31. (Hint: It is not necessary to use all of the preceding items to determine the true balance.)

Nickleson Company had an unadjusted cash balance of $8,907 as of May 31. The company’s bank statement, also dated May 31, included a $95 NSF check written by one of Nickleson’s customers. There were $975 in outstanding checks and $205 in deposits in transit as of May 31. According to the bank statement, service charges were $30, and the bank collected a $1,450 note receivable for Nickleson. The bank statement also showed $21 of interest revenue earned by Nickleson.

Explanation / Answer

Answer:

True cash balance as of May 31 =$10,253

Working notes for the above answer is as under

Unadjusted Cash Balance as of may 31

$8,907

Add: Interest Earned

$21

Note Collected by Bank

$1,450

Less: NSF check

($95)

Less Bank charges

-30

True Cash Balance as of May 31

$10,253

Unadjusted Cash Balance as of may 31

$8,907

Add: Interest Earned

$21

Note Collected by Bank

$1,450

Less: NSF check

($95)

Less Bank charges

-30

True Cash Balance as of May 31

$10,253

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