Tang Company assembled the following information in completing its June bank reconciliation: balance per bank HK$42,920; outstanding checks HK$24,650; deposits in transit HK$27,500; NSF check HK$4,480; bank service charge HK$170; cash balance per books HK$50,420. As a result of this reconciliation, Tang will
A) reduce its cash account by HK $7,500.
B) increase its cash account by HK $2,850.
C) increase its cash account by HK $4,480.
D) reduce its cash account by HK $4,650.

Question

Quizplus · Accepted Answer

The adjusted cash balance per books is calculated as follows:
Beginning balance per books + deposits in transit - outstanding checks - NSF check - bank service charge
= HK$50,420 + HK$27,500 - HK$24,650 - HK$4,480 - HK$170
= HK$48,620
Since the adjusted cash balance per books is lower than the balance per bank, Tang will need to reduce its cash account by the difference, which is HK$4,650. Therefore, the correct choice is D.

Tang Company Assembled the Following Information in Completing Its June