Bertram Company assembled the following information in completing its May bank reconciliation: balance per bank ₤23,460 outstanding checks ₤5,325; deposits in transit ₤3,750; NSF check ₤2,040; bank service charge ₤75; cash balance per books ₤24,000. As a result of this reconciliation, Bertram will
A) reduce its cash account by ₤75.
B) reduce its cash account by ₤2,115.
C) increase its cash account by ₤1,575.
D) increase its cash account by ₤540.

Question

Quizplus · Accepted Answer

To reconcile the bank statement with the company's cash record, adjustments need to be made to the cash balance per books. The balance per bank is ₤23,460, and there are outstanding checks of ₤5,325, which need to be deducted from the balance per bank. Therefore, adjusted balance per bank is ₤18,135. 
Moreover, deposits in transit of ₤3,750 need to be added to the balance per bank. 
NSF check of ₤2,040 also needs to be deducted from the adjusted balance per bank. In addition to the NSF check, the bank service charge of ₤75 also needs to be deducted. Hence, the adjusted balance per books is:

Adjusted balance per books = ₤24,000 - ₤5,325 + ₤3,750 - ₤2,040 - ₤75 = ₤19,310

Finally, the adjusted balance per books is higher than the adjusted balance per bank, so the company should reduce its cash account by the difference, i.e., ₤2,115. Therefore, the correct answer is B.

Bertram Company Assembled the Following Information in Completing Its May