As of June 30, 2018, the bank statement showed an ending balance of $17,862. The unadjusted Cash account balance was $17,102. The following information is available: Deposit in transit, $2,680. Credit memo in bank statement for interest earned in June, $24. Outstanding check, $3,429. Debit memo for service charge, $13. Required Determine the true cash balance by preparing a bank reconciliation as of June 30, 2018, using the preceding information. (Negative amounts should be indicated with minus sign.)

Cash Account Balance (Adjusted) = $17113

Explanation:

The question requires us to determine the true cash balance (cash book balance). We will start by explaining why some of these amount  are excluded in the calculation of the true cash balance.

When Determining True Cash Balance we adjust the current Cash Balance by transactions that have been processed by the back but not processed in the company's ledger books.

Deposit in transit $2680, This amount will be excluded because deposit in transit is the deposits that have been received by company and processed in company's ledger books. These deposits are then sent to the bank. The term in transit implies that the bank as not yet processed these deposits.

Outstanding checks $3429, This amount will also be excluded because outstanding checks are already recorded in the company's ledger books. Outstanding checks are checks sent to the bank by the company that have not yet been processed by the bank

Cash Balance Reconciliation

Cash Account Balance (Not Adjusted) = $17102

Credit memo for interest earned           = $24

Debit Memo for Service Charge             = -$13

*Cash Account Balance (Adjusted)         = $17113

*Cash Account Balance (Adjusted) = ($17102 + $24 - $13)  = $17113

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