The following data apply to Pro Beauty Supply Inc. for May 2018 1. Balance per t

Question

The following data apply to Pro Beauty Supply Inc. for May 2018 1. Balance per the bank on May 31, $11,750 2. Deposits in transit not recorded by the bank, $1,850. 3. Bank error; check written by Best Beauty Supply was charged to Pro Beauty Supply's account, $800 4. The following checks written and recorded by Pro Beauty Supply were not included in the bank statement: 3013 3054 $165 560 3056 1,330 5. Note collected by the bank, $700. 6. Service charge for collection of note, $23. 7. The bookkeeper recorded a check written for $642 to pay for the May utilities expense as $552 in the cash disbursements journal 8. Bank service charge in addition to the note collection fee, $35 9. Customer checks returned by the bank as NSF, $196 Required Determine the amount of the unadjusted cash balance per Pro Beauty Supply's books. nadjusted cash balance

Explanation / Answer

Note For undertanding : In Bank reonciliation topic there are two ways to find the true cash balance :

or

The resulting true cash balance will remain same in both ways .

Computation of True Cash Balance (through balance as per bank) as on May 31,2018

* There is another way to compute true cash balance ie through unadjusted cash balance:

Let the unadjusted cash balance be $x

Thus we can form the following equation :

x + 700 - 23 - 90 - 35 - 196 = 12,345

or x = 11,989

Thus , the amount of unadjusted cash balance as per Pro Beauty Supply's books = $11,989

Details Amount ($) Unadjusted Bank balance on May 31, 2018 11,750 Add : Deposit in trasit not recorded by bank 1,850 Add : Bank Error 800 Less : Check outstanding ($165 + $560 + $1,330) (2,055) True Cash Balance as on May 31 , 2018 12,345

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