Use the following to answer questions 62-64 The Cash account in the ledger of He

Question

Use the following to answer questions 62-64 The Cash account in the ledger of Hensley, Inc. showed a balance of $3,100 at June 30. The bank statement, however, showed a balance of $3,900 at the same date. The only reconciling hems consisted of a $700 deposit in transit, a bank service charge of $7, and a large umber of outstanding checks 62. Refer to the above data. Upon completion of the bank reconciliation, a journal entry will be required to update the depositor's accounting records. This entry will inchude A) a credit to Cash for $700. B) a debit to Cash for $700. C) a debit to Cash for $7. D) a debit to Bank Service Charge Expense for $7. 63. Refer to the above data. What is the total amount of the oustanding chocks a Tone 30 A) $1,513. B) $1,486 C) $1,507. D) Some other amount

Explanation / Answer

62.

No journal entries are prepared to record deposits in transit and outstanding checks because these items have already been recorded in the books. Therefore, only one journal entry will be required to record the bank service charge of $7.

The bank service charge is an expense and will be recorded by debiting bank service charge expense account and crediting cash by $7.

Therefore, the correct answer is D.

63.

Total amount of outstanding checks

= Balance per bank statement + Deposit in transit - Balance per books - Bank service charge

= $3900 + $700 - $3100 - $7

= $1493

$1493 is not given in the options. Therefore, the correct answer is D, some other amount.

64.

Adjusted cash balance

= Balance per books - Bank service charge

= $3,100 - $7

= $3,093

The correct answer is B.

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