[fivehurdles]

NINJA Question –

I know this isn’t Jeff’s fault, but I’m venting here…. apparently you need not only to study the material, but be a mind-reader with regard to the intent of the person that wrote the question…

Hilltop Co.’s monthly bank statement shows a balance of $54,200. Reconciliation of the statement with company books reveals the following information:

Bank service charge: $10
Insufficient funds check: $650
Checks outstanding: $1,500
Deposits in transit: $350
Check deposited by Hilltop and cleared by the bank for $125, but improperly recorded by Hilltop as $152

What is the net cash balance after the reconciliation?
A. $52,363
B. $53,023
C. $53,050
D. $53,077

Answer C (?)

I don’t have a book balance as part of the question, so I’m going to take the bank balance of $54,200 and make the following adjustments:

Bank service charge: $10 (Exclude-already in bk bal)
Insufficient funds ck: $650 Exclude-in bank bal)
Checks outstanding: $1,500 (-1500 adj to bank bal)
Deposits in transit: $350 (+350 adj to bank bal)
Check deposited by Hilltop and cleared by the bank for $125, but improperly recorded by Hilltop as $152 (I need to increase my book side by $27)

I come up with D

Here is the MCQ answer.

We have no way of finding the unadjusted ending month balance per books in the cash account, but we can find the corrected ending cash balance from the information given by starting with the ending bank balance.

The ending bank balance is $54,200 and when we add the deposits in transit and subtract outstanding checks from this balance, we should have the corrected ending balance.

Thus, starting with $54,200 and adding the $350 deposit in transit, and then subtracting the $1,500 checks outstanding, we get $53,050.

The other items would be adjustments to unadjusted ending cash balance, which we do not have, the check error being the company’s error, not the bank’s error.

If it’s asking me for a reconciliation, how can I do one without the book side? If I’m assuming I’m including adjustments for book (question asks for a “reconciliation”) how do I not include the book adjustment.

2011 Results:
BEC 65 83
AUD 57
FAR 30 (Can you get any worse) (11/10)
REG 70

2015-16 Results:
BEC 78
AUD 77
REG 76
FAR June 10

[pharaoh]

Generally bank reconciliation is 2 pieces. Reconciling from bank to book and book to bank and both sides (assuming you are doing them side by side) should have the same balance at the end. However, most question that I came across ask about one reconciliation side.
And to confuse you, they give you info to use on both sides which is the case here.

So from bank to book, most common, deposit in transfer and outstanding checks and I see you got that. The error happened in my books and should be corrected in my books, the bank got it right so there is no need to adjust their number because that means I want them to record the same error too.

FAR 8/2016
AUD 1/2017
REG TBD
BEC TBD

[Author]

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