Mendez Company assembled the following information in completing its July bank reconciliation: balance per bank $22920; outstanding checks $5640; deposits in transit $7300; NSF check $420; bank service charge $95; cash balance per books $26400. As a result of this reconciliation Mendez will
A) reduce its cash account by $95.
B) reduce its cash account by $515.
C) reduce its cash account by $1660.
D) increase its cash account by $325.

Question

Quizplus · Accepted Answer

The correct adjustments to Mendez Company's cash account due to the reconciliation involve accounting for the NSF (non-sufficient funds) check and the bank service charge. The NSF check of $420 and the bank service charge of $95 total $515 ($420 + $95 = $515) that need to be subtracted from the cash balance per books. Outstanding checks, deposits in transit, and the balance per bank are used to reconcile the bank's balance with the company's records but do not directly affect the cash account balance in the company's books.

Mendez Company Assembled the Following Information in Completing Its July