Question

The cash records and the bank statement of Frankel Company showed the following at the end of February: Outstanding checks as of the beginning of February, $8,000; checks written by Frankel Company according to its books during February, $50,000; and checks cleared by the bank during February, $54,000. How much were the outstanding checks at the end of February

Answer 1

Answer: The outstanding checks at the end of February will be $4,000.

Explanation: An outstanding check can be defined as a check that a company has issued and recorded in its accounts, but the check is still unresolved or not settled with the bank account on which it is drawn.

This means that the bank balance will be greater than the company's true amount of cash.

At the beginning of February the company had an outstanding check of $8,000.

During the month of February, the bank statement showed $54,000 cashed while the company's books showed Frankel only writing out $50,000 in February.

Therefore, the outstanding checks would have decreased from $8,000 to $4,000 outstanding at the end of February.