Question

Duke Company's unadjusted bank balance at March 31, 2016 is $6,490. The bank reconciliation revealed outstanding checks amounting to $940 and deposits in transit of $640. Based on this information, Duke's true cash balance is:

Answer 1

$6,190

Step-by-step explanation:

Bank Reconciliation: The bank reconciliation deals with the bank statement balance and the cash statement balance. The motive is to compare these two statements so that the organization can run in the smoothly manner.

There are various transactions due to which the bank statement balance and the cash statement balance do not match. To match these statements, we adjust the transactions accordingly.

The computation of true cash balance is shown below:

= Unadjusted cash balance - outstanding checks + deposits in transit

= $6,490 - $940 + $640

= $6,190

We simply added the deposit in transit and deduct the outstanding check to the unadjusted cash balance so that the accurate amount can come