Longfellow Company gathered the following reconciling information in preparing its April bank reconciliation: The adjusted cash balance per books at April 30 is
A) ₤9,820.
B) ₤9,670.
C) ₤7,970.
D) ₤5,590.

Question

Longfellow Company gathered the following reconciling information in preparing its April bank reconciliation:  The adjusted cash balance per books at April 30 is
A) ₤9,820. 
B) ₤9,670. 
C) ₤7,970. 
D) ₤5,590.

Quizplus · Accepted Answer

Starting with the unadjusted balance of ₤10,020, we add deposits in transit (₤5,000) and subtract outstanding checks (₤4,300) to get an adjusted balance of ₤10,720. 
Next, we must consider bank errors: 
- A deposit of ₤1,300 was recorded by the bank as ₤1,800, resulting in a false increase of ₤500 in the bank balance. 
- A check for ₤1,050 cleared the bank but was recorded in Longfellow's books as ₤1,500, resulting in a false decrease of ₤450 in the bank balance. 
To reconcile these errors, we subtract the false increase (₤500) and add the false decrease (₤450). 
Therefore, the adjusted cash balance per books at April 30 is ₤10,670 - ₤1,500 + ₤500 = ₤9,670.

Longfellow Company Gathered the Following Reconciling Information in Preparing Its