Question

The bank statement balance of $7,000 does not include a check outstanding of $1,000, a deposit in transit of $275 and another company's $250 check erroneously charged against your firm's account. The reconciled bank balance is:

Answer 1

The reconciled bank balance is calculated by adjusting the bank statement balance for outstanding checks, deposits in transit, and any erroneous charges. After accounting for these items, the reconciled bank balance would be $6,525.

Step-by-step explanation:

To reconcile the bank balance, we need to adjust the bank statement balance by accounting for the outstanding checks, deposits in transit, and erroneous charges. Starting with a bank statement balance of $7,000, we subtract the outstanding check of $1,000, which has not yet cleared. Next, we add the deposit in transit of $275, which has been sent to the bank but is not yet reflected on the statement. Lastly, we add back the erroneous charge of $250, since this is not a transaction that belongs to the firm. The adjusted and reconciled bank balance is calculated as follows:

Bank Statement Balance: $7,000
Less: Outstanding Check: ($1,000)
Add: Deposit in Transit: $275
Add: Erroneous Charge Reversed: $250
Reconciled Bank Balance: $6,525